Speech Transcript:

 Mr. Speaker, Mr. Vice President, Members of the 95th Congress, and
distinguished guests:

In accordance with the Constitution, I come before you once again to
report on the state of the Union.

This report will be my last--maybe--but for the Union it is only the
first of such reports in our third century of independence, the close
of which none of us will ever see. We can be confident, however, that
100 years from now a freely elected President will come before a
freely elected Congress chosen to renew our great Republic's pledge
to the Government of the people, by the people, and for the people.

For my part I pray the third century we are beginning will bring to
all Americans, our children and their children's children, a greater
measure of individual equality, opportunity, and justice, a greater
abundance of spiritual and material blessings, and a higher quality
of life, liberty, and the pursuit of happiness.

The state of the Union is a measurement of the many elements of which
it is composed--a political union of diverse States, an economic union
of varying interests, an intellectual union of common convictions, and
a moral union of immutable ideals.

Taken in sum, I can report that the state of the Union is good. There
is room for improvement, as always, but today we have a more perfect
Union than when my stewardship began.

As a people we discovered that our Bicentennial was much more than a
celebration of the past; it became a joyous reaffirmation of all that
it means to be Americans, a confirmation before all the world of the
vitality and durability of our free institutions. I am proud to have
been privileged to preside over the affairs of our Federal Government
during these eventful years when we proved, as I said in my first
words upon assuming office, that "our Constitution works; our great
Republic is a Government of laws and not of men. Here the people
rule."

The people have spoken; they have chosen a new President and a new
Congress to work their will. I congratulate you--particularly the new
Members--as sincerely as I did President-elect Carter. In a few days
it will be his duty to outline for you his priorities and legislative
recommendations. Tonight I will not infringe on that responsibility,
but rather wish him the very best in all that is good for our
country.

During the period of my own service in this Capitol and in the White
House, I can recall many orderly transitions of governmental
responsibility--of problems as well as of position, of burdens as
well as of power. The genius of the American system is that we do
this so naturally and so normally. There are no soldiers marching in
the street except in the Inaugural Parade; no public demonstrations
except for some of the dancers at the Inaugural Ball; the opposition
party doesn't go underground, but goes on functioning vigorously in
the Congress and in the country; and our vigilant press goes right on
probing and publishing our faults and our follies, confirming the
wisdom of the framers of the first amendment.

Because of the transfer of authority in our form of government
affects the state of the Union and of the world, I am happy to report
to you that the current transition is proceeding very well. I was
determined that it should; I wanted the new President to get off on
an easier start than I had.

When I became President on August 9, 1974, our Nation was deeply
divided and tormented. In rapid succession the Vice President and the
President had resigned in disgrace. We were still struggling with the
after-effects of a long, unpopular, and bloody war in Southeast Asia.
The economy was unstable and racing toward the worst recession in 40
years. People were losing jobs. The cost of living was soaring. The
Congress and the Chief Executive were at loggerheads. The integrity
of our constitutional process and other institutions was being
questioned. For more than 15 years domestic spending had soared as
Federal programs multiplied, and the expense escalated annually.
During the same period our national security needs were steadily
shortchanged. In the grave situation which prevailed in August 1974,
our will to maintain our international leadership was in doubt.

I asked for your prayers and went to work.

In January 1975 I reported to the Congress that the state of the
Union was not good. I proposed urgent action to improve the economy
and to achieve energy independence in 10 years. I reassured America's
allies and sought to reduce the danger of confrontation with potential
adversaries. I pledged a new direction for America. 1975 was a year of
difficult decisions, but Americans responded with realism, common
sense, and self-discipline.

By January 1976 we were headed in a new direction, which I hold to be
the right direction for a free society. It was guided by the belief
that successful problemsolving requires more than Federal action
alone, that it involves a full partnership among all branches and all
levels of government and public policies which nurture and promote the
creative energies of private enterprises, institutions, and individual
citizens.

A year ago I reported that the state of the Union was better-- in
many ways a lot better--but still not good enough. Common sense told
me to stick to the steady course we were on, to continue to restrain
the inflationary growth of government, to reduce taxes as well as
spending, to return local decisions to local officials, to provide
for long-range sufficiency in energy and national security needs. I
resisted the immense pressures of an election year to open the
floodgates of Federal money and the temptation to promise more than I
could deliver. I told it as it was to the American people and
demonstrated to the world that in our spirited political competition,
as in this chamber, Americans can disagree without being
disagreeable.

Now, after 30 months as your President, I can say that while we still
have a way to go, I am proud of the long way we have come together.

I am proud of the part I have had in rebuilding confidence in the
Presidency, confidence in our free system, and confidence in our
future. Once again, Americans believe in themselves, in their
leaders, and in the promise that tomorrow holds for their children.

I am proud that today America is at peace. None of our sons are
fighting and dying in battle anywhere in the world. And the chance
for peace among all nations is improved by our determination to honor
our vital commitments in defense of peace and freedom.

I am proud that the United States has strong defenses, strong
alliances, and a sound and courageous foreign policy.

Our alliances with major partners, the great industrial democracies
of Western Europe, Japan, and Canada, have never been more solid.
Consultations on mutual security, defense, and East-West relations
have grown closer. Collaboration has branched out into new fields
such as energy, economic policy, and relations with the Third World.
We have used many avenues for cooperation, including summit meetings
held among major allied countries. The friendship of the democracies
is deeper, warmer, and more effective than at any time in 30 years.

We are maintaining stability in the strategic nuclear balance and
pushing back the specter of nuclear war. A decisive step forward was
taken in the Vladivostok Accord which I negotiated with General
Secretary Brezhnev--joint recognition that an equal ceiling should be
placed on the number of strategic weapons on each side. With resolve
and wisdom on the part of both nations, a good agreement is well
within reach this year.

The framework for peace in the Middle East has been built. Hopes for
future progress in the Middle East were stirred by the historic
agreements we reached and the trust and confidence that we formed.
Thanks to American leadership, the prospects for peace in the Middle
East are brighter than they have been in three decades. The Arab
states and Israel continue to look to us to lead them from
confrontation and war to a new era of accommodation and peace. We
have no alternative but to persevere, and I am sure we will. The
opportunities for a final settlement are great, and the price of
failure is a return to the bloodshed and hatred that for too long
have brought tragedy to all of the peoples of this area and
repeatedly edged the world to the brink of war.

Our relationship with the People's Republic of China is proving its
importance and its durability. We are finding more and more common
ground between our two countries on basic questions of international
affairs.

In my two trips to Asia as President, we have reaffirmed America's
continuing vital interest in the peace and security of Asia and the
Pacific Basin, established a new partnership with Japan, confirmed
our dedication to the security of Korea, and reinforced our ties with
the free nations of Southeast Asia.

An historic dialog has begun between industrial nations and
developing nations. Most proposals on the table are the initiatives
of the United States, including those on food, energy, technology,
trade, investment, and commodities. We are well launched on this
process of shaping positive and reliable economic relations between
rich nations and poor nations over the long term.

We have made progress in trade negotiations and avoided protectionism
during recession. We strengthened the international monetary system.
During the past 2 years the free world's most important economic
powers have already brought about important changes that serve both
developed and developing economies. The momentum already achieved
must be nurtured and strengthened, for the prosperity of the rich and
poor depends upon it.

In Latin America, our relations have taken on a new maturity and a
sense of common enterprise.

In Africa the quest for peace, racial justice, and economic progress
is at a crucial point. The United States, in close cooperation with
the United Kingdom, is actively engaged in this historic process.
Will change come about by warfare and chaos and foreign intervention?
Or will it come about by negotiated and fair solutions, ensuring
majority rule, minority rights, and economic advance? America is
committed to the side of peace and justice and to the principle that
Africa should shape its own future, free of outside intervention.

American leadership has helped to stimulate new international efforts
to stem the proliferation of nuclear weapons and to shape a
comprehensive treaty governing the use of oceans.

I am gratified by these accomplishments. They constitute a record of
broad success for America and for the peace and prosperity of all
mankind. This administration leaves to its successor a world in
better condition than we found. We leave, as well, a solid foundation
for progress on a range of issues that are vital to the well-being of
America.

What has been achieved in the field of foreign affairs and what can
be accomplished by the new administration demonstrate the genius of
Americans working together for the common good. It is this, our
remarkable ability to work together, that has made us a unique
nation. It is Congress, the President, and the people striving for a
better world.

I know all patriotic Americans want this Nation's foreign policy to
succeed. I urge members of my party in this Congress to give the new
President loyal support in this area. I express the hope that this
new Congress will reexamine its constitutional role in international
affairs.

The exclusive right to declare war, the duty to advise and consent on
the part of the Senate, the power of the purse on the part of the
House are ample authority for the legislative branch and should be
jealously guarded. But because we may have been too careless of these
powers in the past does not justify congressional intrusion into, or
obstruction of, the proper exercise of Presidential responsibilities
now or in the future. There can be only one Commander in Chief. In
these times crises cannot be managed and wars cannot be waged by
committee, nor can peace be pursued solely by parliamentary debate.
To the ears of the world, the President speaks for the Nation. While
he is, of course, ultimately accountable to the Congress, the courts,
and the people, he and his emissaries must not be handicapped in
advance in their relations with foreign governments as has sometimes
happened in the past.

At home I am encouraged by the Nation's recovery from the recession
and our steady return to sound economic growth. It is now continuing
after the recent period of uncertainty, which is part of the price we
pay for free elections.

Our most pressing need today and the future is more jobs- productive,
permanent jobs created by a thriving economy. We must revise our tax
system both to ease the burden of heavy taxation and to encourage the
investment necessary for the creation of productive jobs for all
Americans who want to work.

Earlier this month I proposed a permanent income tax reduction of $10
billion below current levels, including raising the personal exemption
from $750 to $1,000. I also recommended a series of measures to
stimulate investment, such as accelerated depreciation for new plants
and equipment in areas of high unemployment, a reduction in the
corporate tax rate from 48 to 46 percent, and eliminating the present
double taxation of dividends. I strongly urge the Congress to pass
these measures to help create the productive, permanent jobs in the
private economy that are so essential for our future.

All the basic trends are good; we are not on the brink of another
recession or economic disaster. If we follow prudent policies that
encourage productive investment and discourage destructive inflation,
we will come out on top, and I am sure we will.

We have successfully cut inflation by more than half. When I took
office, the Consumer Price Index was rising at 12.2 percent a year.
During 1976 the rate of inflation was 5 percent.

We have created more jobs--over 4 million more jobs today than in the
spring of 1975. Throughout this Nation today we have over 88 million
people in useful, productive jobs--more than at any other time in our
Nation's history. But there are still too many Americans unemployed.
This is the greatest regret that I have as I leave office.

We brought about with the Congress, after much delay, the renewal of
the general revenue sharing. We expanded community development and
Federal manpower programs. We began a significant urban mass transit
program. Federal programs today provide more funds for our States and
local governments than ever before--$70 billion for the current fiscal
year. Through these programs and others that provide aid directly to
individuals, we have kept faith with our tradition of compassionate
help for those who need it. As we begin our third century we can be
proud of the progress that we have made in meeting human needs for
all of our citizens.

We have cut the growth of crime by nearly 90 percent. Two years ago
crime was increasing at the rate of 18 percent annually. In the first
three quarters of 1976, that growth rate had been cut to 2 percent.
But crime, and the fear of crime, remains one of the most serious
problems facing our citizens.

We have had some successes, and there have been some disappointments.
Bluntly, I must remind you that we have not made satisfactory progress
toward achieving energy independence. Energy is absolutely vital to
the defense of our country, to the strength of our economy, and to
the quality of our lives.

Two years ago I proposed to the Congress the first comprehensive
national energy program - a specific and coordinated set of measures
that would end our vulnerability to embargo, blockade, or arbitrary
price increases and would mobilize U.S. technology and resources to
supply a significant share of the free world's energy after 1985. Of
the major energy proposals I submitted 2 years ago, only half,
belatedly, became law. In 1973 we were dependent upon foreign oil
imports for 36 percent of our needs. Today, we are 40-percent
dependent, and we'll pay out $34 billion for foreign oil this year.
Such vulnerability at present or in the future is intolerable and
must be ended.

The answer to where we stand on our national energy effort today
reminds me of the old argument about whether the tank is half full or
half empty. The pessimist will say we have half failed to achieve our
10-year energy goals; the optimist will say that we have half
succeeded. I am always an optimist, but we must make up for lost
time.

We have laid a solid foundation for completing the enormous task
which confronts us. I have signed into law five major energy bills
which contain significant measures for conservation, resource
development, stockpiling, and standby authorities. We have moved
forward to develop the naval petroleum reserves; to build a
500-million barrel strategic petroleum stockpile; to phase out
unnecessary Government allocation and price controls; to develop a
lasting relationship with other oil consuming nations; to improve the
efficiency of energy use through conservation in automobiles,
buildings, and industry; and to expand research on new technology and
renewable resources such as wind power, geothermal and solar energy.
All these actions, significant as they are for the long term, are
only the beginning.

I recently submitted to the Congress my proposals to reorganize the
Federal energy structure and the hard choices which remain if we are
serious about reducing our dependence upon foreign energy. These
include programs to reverse our declining production of natural gas
and increase incentives for domestic crude oil production. I proposed
to minimize environmental uncertainties affecting coal development,
expand nuclear power generation, and create an energy independence
authority to provide government financial assistance for vital energy
programs where private capital is not available.

We must explore every reasonable prospect for meeting our energy
needs when our current domestic reserves of oil and natural gas begin
to dwindle in the next decade. I urgently ask Congress and the new
administration to move quickly on these issues. This Nation has the
resources and the capability to achieve our energy goals if its
Government has the will to proceed, and I think we do.

I have been disappointed by inability to complete many of the
meaningful organizational reforms which I contemplated for the
Federal Government, although a start has been made. For example, the
Federal judicial system has long served as a model for other courts.
But today it is threatened by a shortage of qualified Federal judges
and an explosion of litigation claiming Federal jurisdiction. I
commend to the new administration and the Congress the recent report
and recommendations of the Department of Justice, undertaken at my
request, on "the needs of the Federal Courts." I especially endorse
its proposals for a new commission on the judicial appointment
process.

While the judicial branch of our Government may require
reinforcement, the budgets and payrolls of the other branches remain
staggering. I cannot help but observe that while the White House
staff and the Executive Office of the President have been reduced and
the total number of civilians in the executive branch contained during
the 1970's, the legislative branch has increased substantially
although the membership of the Congress remains at 535. Congress now
costs the taxpayers more than a million dollars per Member; the whole
legislative budget has passed the billion dollar mark.

I set out to reduce the growth in the size and spending of the
Federal Government, but no President can accomplish this alone. The
Congress sidetracked most of my requests for authority to consolidate
overlapping programs and agencies, to return more decisionmaking and
responsibility to State and local governments through block grants
instead of rigid categorical programs, and to eliminate unnecessary
redtape and outrageously complex regulations.

We have made some progress in cutting back the expansion of
government and its intrusion into individual lives, but believe me,
there is much more to be done--and you and I know it. It can only be
done by tough and temporarily painful surgery by a Congress as
prepared as the President to face up to this very real political
problem. Again, I wish my successor, working with a substantial
majority of his own party, the best of success in reforming the
costly and cumbersome machinery of the Federal Government.

The task of self-government is never finished. The problems are
great; the opportunities are greater.

America's first goal is and always will be peace with honor. America
must remain first in keeping peace in the world. We can remain first
in peace only if we are never second in defense.

In presenting the state of the Union to the Congress and to the
American people, I have a special obligation as Commander in Chief to
report on our national defense. Our survival as a free and independent
people requires, above all, strong military forces that are well
equipped and highly trained to perform their assigned mission.

I am particularly gratified to report that over the past 2 1/2 years,
we have been able to reverse the dangerous decline of the previous
decade in real resources this country was devoting to national
defense. This was an immediate problem I faced in 1974. The evidence
was unmistakable that the Soviet Union had been steadily increasing
the resources it applied to building its military strength. During
this same period the United States real defense spending declined. In
my three budgets we not only arrested that dangerous decline, but we
have established the positive trend which is essential to our ability
to contribute to peace and stability in the world.

The Vietnam war, both materially and psychologically, affected our
overall defense posture. The dangerous antimilitary sentiment
discouraged defense spending and unfairly disparaged the men and
women who serve in our Armed Forces.

The challenge that now confronts this country is whether we have the
national will and determination to continue this essential defense
effort over the long term, as it must be continued. We can no longer
afford to oscillate from year to year in so vital a matter; indeed,
we have a duty to look beyond the immediate question of budgets and
to examine the nature of the problem we will face over the next
generation.

I am the first recent President able to address long-term, basic
issues without the burden of Vietnam. The war in Indo-china consumed
enormous resources at the very time that the overwhelming strategic
superiority we once enjoyed was disappearing. In past years, as a
result of decisions by the United States, our strategic forces
leveled off, yet the Soviet Union continued a steady, constant
buildup of its own forces, committing a high percentage of its
national economic effort to defense.

The United States can never tolerate a shift in strategic balance
against us or even a situation where the American people or our
allies believe the balance is shifting against us. The United States
would risk the most serious political consequences if the world came
to believe that our adversaries have a decisive margin of
superiority.

To maintain a strategic balance we must look ahead to the 1980's and
beyond. The sophistication of modern weapons requires that we make
decisions now if we are to ensure our security 10 years from now.
Therefore, I have consistently advocated and strongly urged that we
pursue three critical strategic programs: the Trident missile
launching submarine; the B-1 bomber, with its superior capability to
penetrate modern air defenses; and a more advanced intercontinental
ballistic missile that will be better able to survive nuclear attack
and deliver a devastating retaliatory strike.

In an era where the strategic nuclear forces are in rough
equilibrium, the risks of conflict below the nuclear threshold may
grow more perilous. A major, long-term objective, therefore, is to
maintain capabilities to deal with, and thereby deter, conventional
challenges and crises, particularly in Europe.

We cannot rely solely on strategic forces to guarantee our security
or to deter all types of aggression. We must have superior naval and
marine forces to maintain freedom of the seas, strong multipurpose
tactical air forces, and mobile, modern ground forces. Accordingly, I
have directed a long-term effort to improve our worldwide capabilities
to deal with regional crises.

I have submitted a 5-year naval building program indispensable to the
Nation's maritime strategy. Because the security of Europe and the
integrity of NATO remain the cornerstone of American defense policy,
I have initiated a special, long-term program to ensure the capacity
of the Alliance to deter or defeat aggression in Europe.

As I leave office I can report that our national defense is
effectively deterring conflict today. Our Armed Forces are capable of
carrying out the variety of missions assigned to them. Programs are
underway which will assure we can deter war in the years ahead. But I
also must warn that it will require a sustained effort over a period
of years to maintain these capabilities. We must have the wisdom, the
stamina, and the courage to prepare today for the perils of tomorrow,
and I believe we will.

As I look to the future--and I assure you I intend to go on doing
that for a good many years--I can say with confidence that the state
of the Union is good, but we must go on making it better and better.

This gathering symbolizes the constitutional foundation which makes
continued progress possible, synchronizing the skills of three
independent branches of Government, reserving fundamental sovereignty
to the people of this great land. It is only as the temporary
representatives and servants of the people that we meet here, we
bring no hereditary status or gift of infallibility, and none follows
us from this place.

Like President Washington, like the more fortunate of his successors,
I look forward to the status of private citizen with gladness and
gratitude. To me, being a citizen of the United States of America is
the greatest honor and privilege in this world.

From the opportunities which fate and my fellow citizens have given
me, as a Member of the House, as Vice President and President of the
Senate, and as President of all the people, I have come to understand
and place the highest value on the checks and balances which our
founders imposed on government through the separation of powers among
co-equal legislative, executive, and judicial branches. This often
results in difficulty and delay, as I well know, but it also places
supreme authority under God, beyond any one person, any one branch,
any majority great or small, or any one party. The Constitution is
the bedrock of all our freedoms. Guard and cherish it, keep honor and
order in your own house, and the Republic will endure.

It is not easy to end these remarks. In this Chamber, along with some
of you, I have experienced many, many of the highlights of my life. It
was here that I stood 28 years ago with my freshman colleagues, as
Speaker Sam Rayburn administered the oath. I see some of you now--
Charlie Bennett, Dick Bolling, Carl Perkins, Pete Rodino, Harley
Staggers, Tom Steed, Sid Yates, Clem Zablocki--and I remember those
who have gone to their rest. It was here we waged many, many a lively
battle--won some, lost some, but always remaining friends. It was
here, surrounded by such friends, that the distinguished Chief
Justice swore me in as Vice President on December 6, 1973. It was
here I returned 8 months later as your President to ask not for a
honeymoon, but for a good marriage.

I will always treasure those memories and your many, many kindnesses.
I thank you for them all.

My fellow Americans, I once asked you for your prayers, and now I
give you mine: May God guide this wonderful country, its people, and
those they have chosen to lead them. May our third century be
illuminated by liberty and blessed with brotherhood, so that we and
all who come after us may be the humble servants of thy peace. Amen.

Good night. God bless you.