Speech Transcript:

 Mr. Speaker, Mr. President, distinguished members of the Congress,
honored guests and fellow citizens, thank you for allowing me to
delay my address until this evening. We paused together to mourn and
honor the valor of our seven Challenger heroes . And I hope that we
are now ready to do what they would want us to do -- go forward
America and reach for the stars. (Applause.) We will never forget
those brave seven, but we shall go forward.

Mr. Speaker, before I begin my prepared remarks, may I point out that
tonight marks the 10th and last State of the Union message that you've
presided over. And on behalf of the American people, I want to salute
you for your service to Congress and country. (Applause)

I have come to review with you the progress of our Nation, to speak
of unfinished work, and to set our sights on the future. I am pleased
to report the state of our Union is stronger than a year ago, and
growing stronger each day. (Applause.) Tonight, we look out on a
rising America -- firm of heart, united in spirit, powerful in pride
and patriotism -- America is on the move!

But, it wasn't long ago that we looked out on a different land --
locked factory gates, long gasoline lines, intolerable prices and
interest rates turning the greatest country on earth into a land of
broken dreams. Government growing beyond our consent had become a
lumbering giant, slamming shut the gates of opportunity, threatening
to crush the very roots of our freedom.

What brought America back? The American people brought us back --
with quiet courage and common sense; (applause) with undying faith
that in this Nation under God the future will be ours, for the future
belongs to the free.

Tonight the American people deserve our thanks -- for 37 straight
months of economic growth; for sunrise firms and modernized
industries creating 9 million new jobs in 3 years; interest rates cut
in half, inflation falling over from 12 percent in 1980 to under 4
today; and a mighty river of good works, a record $74 billion in
voluntary giving just last year alone.

And despite the pressures of our modern world, family and community
remain the moral core of our society, guardians of our values and
hopes for the future. Family and community are the co-stars of this
Great American Comeback. They are why we say tonight: Private values
must be at the heart of public policies.

What is true for families in America is true for America in the
family of free nations. History is no captive of some inevitable
force. History is made by men and women of vision and courage.
Tonight, freedom is on the march. The United States is the economic
miracle, the model to which the world once again turns. We stand for
an idea whose time is now: Only by lifting the weights from the
shoulders of all can people truly prosper and can peace among all
nations be secure.

Teddy Roosevelt said that a nation that does great work lives
forever. We have done well, but we cannot stop at the foothills when
Everest beckons. It's time for America to be all that we can be.

We speak tonight of an "Agenda for the Future," an agenda for a
safer, more secure world. And we speak about the necessities for
actions to steel us for the challenges of growth, trade and security
in the next decade and the year 2000. And we will do it -- not by
breaking faith with bedrock principles, but by breaking free from
failed policies. (Applause.)

Let us begin where storm clouds loom darkest -- right here in
washington, D.C. This week I will send you our detailed proposals;
tonight, let us speak of our responsibility to redefine government's
role: Not to control, not to demand or command, not to contain us;
but to help in times of need, and above all, to create a ladder of
opportunity to full employment so that all Americans can climb toward
economic power and justice on their own.

But we cannot win the race to the future shackled to a system that
can't even pass a federal budget. We cannot win that race held back
by horse-and-buggy programs that waste tax dollars and squander human
potential. We cannot win that race if we're swamped in a sea of red
ink.

Now, Mr. Speaker, you know, I know, and the American people know the
federal budget system is broken. It doesn't work. Before we leave
this city, let's you and I work together to fix it. (Applause.) And
then we can finally given the American people a balanced budget.
(Applause.)

Members of Congress, passage of Gramm-Rudman-Hollings gives us an
historic opportunity to achieve what has eluded our national
leadership for decades, forcing federal government to live within its
means.

Your schedule now requires that the budget resolution be passed by
April 15th, the very day America's families have to foot the bill for
the budgets that you produce.

How often we read of a husband and wife both working, struggling from
paycheck to paycheck to raise a family, meet a mortgage, pay their
taxes and bills. And yet, some in Congress say taxes must be raised.
Well, I'm sorry -- they're asking the wrong people to tighten their
belts. (Applause.) It's time we reduce the federal budget and left
the family budget alone. (Applause.) We do not face large deficits
because American families are undertaxed; we face those deficits
because the federal government overspends.

The detailed budget that we will submit will meet the
Gramm-Rudman-Hollings target for deficit reductions, meet our
commitment to ensure a strong national defense, meet our commitment
to protect Social Security and the truly less fortunate, and, yes,
meet our commitment to not raise taxes. (Applause.)

How should we accomplish this? Well, not by taking from those in
need. As families take care of their own, government must provide
shelter and nourishment for those who cannot provide for themselves.
But we must revise or replace programs enacted in the name of
compassion that degrade the moral worth of work, encourage family
breakups, and drive entire communities into a bleak and heartless
dependency.

Gramm-Rudman-Hollings can mark a dramatic improvement. But experience
shows that simply setting deficit targets does not assure they'll be
met. We must proceed with Grace Commission reforms against waste. And
tonight, I ask you to give me what 43 Governors have -- give me a
line-item veto this year. (Applause.) Give me the authority to veto
waste, and I'll take the responsibility, I'll make the cuts, I'll
take the heat.

This authority would not give me any monopoly power, but simply
prevent spending measures from sneaking through that could not pass
on their own merit. And you can sustain or override my veto --
that's, that's the way the system should work. Once we've made the
hard choices, we should lock in our gains with a balanced budget
amendment to the Constitution. (Applause.) I mentioned that we will
meet our commitment to national defense. We must meet it. Defense is
not just another budget expense. Keeping America strong, free, and at
peace is solely the responsibility of the Federal Government; it is
Government's prime responsibility. We have devoted five years trying
to narrow a dangerous gap born of illusion and neglect. And we've
made important gains. Yet the threat from Soviet forces, conventional
and strategic, from the Soviet drive for domination, from the increase
in espionage and state terror remains great. This is reality. Closing
our eyes will not make reality disappear.

We pledge together to hold real growth in defense spending to the
bare minimum. My budget honors that pledge. And I'm now asking you,
the Congress, to keep its end of the bargain. The Soviets must know
that if America reduces her defenses, it will be because of a reduced
threat, not a reduced resolve. (Applause.)

Keeping America strong is as vital to the national security as
controlling Federal spending is to our economic security. But, as I
have said before, the most powerful force we can enlist against the
Federal deficit is an ever-expanding American economy, unfettered and
free.

The magic of opportunity -- unreserved, unfailing, unrestrained --
isn't this the calling that unites us? I believe our tax rate cuts
for the people have done more to spur a spirit of risk-taking and
help America's economy break free than any program since John
Kennedy's tax cut almost a quarter century ago.

Now history calls us to press on, to complete efforts for an historic
tax reform providing new opportunity for all and ensuring that all pay
their fair share -- but no more. We've come this far. Will you join me
now and we'll walk this last mile together? (Applause.)

You know my views on this. We cannot and we will not accept tax
reform that is a tax increase in disguise. True reform must be an
engine of productivity and growth, and that means a top personal rate
no higher than 35 percent. True reform must be truly fair and that
means raising personal exemptions to $2,000. True reform means a tax
system that at long last is pro-family, pro-jobs, pro-future, and
pro-America. (Applause.)

As we knock down the barriers to growth, we must redouble our efforts
for freer and fairer trade. We have already taken actions to counter
unfair trading practices to pry open closed foreign markets. We will
continue to do so. We will also oppose legislation touted as
providing protection that in reality pits one American worker against
another, one industry against another, one community against another,
and that raises prices for us all. If the United States can trade
with other nations on a level playing field, we can out-produce,
out-compete, and out-sell anybody, anywhere in the world.
(Applause.)

The constant expansion of our economy and exports requires a sound
and stable dollar at home and reliable exchange rates around the
world. We must never gain permit wild currency swings to cripple our
farmers and other exporters. Farmers, in particular, have suffered
from past unwise government policies. They must not be abandoned with
problems they did not create and cannot control. We've begun
coordinating economic and monetary policy among our major trading
partners. But therehs more to do, and tonight I am directing Treasury
Secretary Jim Baker to determine if the nations of the world should
convene to discuss the role and relationship of our currencies.
(Applause.)

Confident in our future, and secure in our values, Americans are
striving forward to embrace the future. We see it not only in our
recovery, but in three straight years of falling crime rates, as
families and communities band together to fight pornography, drugs,
and lawlessness, and to give back to their children the safe and,
yes, innocent childhood they deserve. We see it in the renaissance in
education, the rising SAT scores for three years -- last year's
increase the greatest since 1963. It wasn't government and Washington
lobbies that turned education around, it was the American people who,
in reaching for excellence, knew to reach back to basics. We must
continue the advance by supporting discipline in our schools;
vouchers that give parents freedom of choice; and we must give back
to our children their lost right to acknowledge God in their
classrooms. (Applause.)

We are a nation of idealists, yet today there is a wound in our
national conscience; America will never be whole as long as the right
to life granted by our Creator is denied to the unborn. For the rest
of my time, I shall do what I can to see that this wound is one day
healed. (Applause.)

As we work to make the American Dream real for all, we must also look
to the condition of America's families. Struggling parents today worry
how they will provide their children the advantages that their parents
gave them. In the welfare culture, the breakdown of the family, the
most basic support system, has reached crisis proportions -- in
female and child poverty, child abandonment, horrible crimes and
deteriorating schools. After hundreds of billions of dollars in
poverty programs, the plight of the poor grows more painful. But the
waste in dollars and cents pales before the most tragic loss -- the
sinful waste of human spirit and potential.

We can ignore this terrible truth no longer. As Franklin Roosevelt
warned 51 years ago, standing before this chamber, he said, "Welfare
is a narcotic, a subtle destroer of the human spirit." And we must
now escape the spider's web of dependency. Tonight I am charging the
White House Domestic Council to present me by December 1, 1986, an
evaluation of programs and a strategy for immediate action to meet
the financial, educational, social, and safety concerns of poor
families. I am talking about real and lasting emancipation, because
the success of welfare should be judged by how many of its recipients
become independent of welfare. (applause.)

Further, after seeing how devastating illness can destroy the
financial security of the family, I am directing the Secretary of
Health and Human Services, Dr. Otis Bowen, to report to me by year
end with recommendations on how the private sector and government can
work together to address the problems of affordable insurance for
those whose life savings would otherwise be threatened when
catastrophic illness strikes.

And tongight I want to speak directly to America's younger
generation, because you hold the destiny of our nation in your hands.
With all the temptations young people face it sometimes seems the
allure of the permissive society requires superhuman feats of
self-control. But the call of the future is too strong, the challenge
too great to get lost in the blind alleyways of dissolution, drugs,
and despair.

Never has there been a more exciting time to be alive -- a time of
rousing wonder and heroic achievement. As they said in the film, Back
to the Future, "Where we are going, we don't need roads." Well, today
physicists peering into the infinitely small realms of subatomic
particles find reaffirmations of religious faith. Astronomers build a
space telescope that can see to the edge of the universe and possibly
back to the moment of creation.

So, yes, this nation remains fully committed to America's space
program . We're going forward with our shuttle flights, we're going
forward to build our space station, and we are going forward with
research on a new Orient Express that could, by the end of the next
decade, take off from Dulles Airport, accelerate up to 25 times the
speed of sound, attaining low earth orbit or flying to Tokyo within
two hours. (Applause.)

And the same technology transforming our lives can solve the greatest
problem of the 20th century. A security shield can one day render
nuclear weapons obsolete and free mankind from the prison of nuclear
terror. (Applause.) America met one historic challenge and went to
the moon. Now America must meet another -- to make our strategic
defense real for all the citizens of planet Earth.

Let us speak of our deepest longing for the future -- to leave our
children a land that is free and just and a world at peace. It is my
hope that our fireside summit in Geneva and Mr. Gorbachev's upcoming
visit to America can lead to a more stable relationship. Surely no
people no Earth hate war more or love peace more than we Americans.
(Applause.)

But we cannot stroll into the future with child-like faith. Our
differences with a system that openly proclaims and practices an
alleged right to command people's lives and to export its ideology by
force are deep and abiding.

Logic and history compel us to accept that our relationship be guided
by realism -- rockhard, clear-eyed, steady, and sure. Our negotiators
in Geneva have proposed a radical cut in offensive forces by each
side, with no cheating. They have made clear that Soviet compliance
with the letter and spirit of agreements is essential. If the Soviet
government wants an agreement that truly reduces nuclear arms, there
will be an agreement. (Applause.)

But arms control is no substitute for peace. We know that peace
follows in freedom's path and conflicts erupt when the will of the
people is denied. So we must prepare for peace not only by reducing
weapons but by bolstering prosperity, liberty, and democracy however
and wherever we can. (Applause.)

We advance the promise of opportunity every time we speak out on
behalf of lower tax rates, freer markets, sound currencies around the
world. We strengthen the family of freedom evey time we work with
allies and come to the aid of friends under seige. And we can enlarge
the family of free nations if we will defend the unalienable rights of
all God's children to follow their dreams.

To those imprisoned in regimed held captive, to those beaten for
daring to fight for freedom and democracy -- for their right to
worship, to speak, to live and to prosper in the family of free
nations -- we say to you tonight: You are not alone Freedom Fighters.
America will support you with moral and material assistance your right
not just to fight and die for freedom, but to fight and with freedom
-- (applause) -- to win freedom in Afghanistan; in Angola; in
Cambodia; and in Nicaragua . (Applause.)

This is a great moral challenge for the entire world. Surely, no
issue is more important for peace in our own hemisphere, for the
security of our frontiers, for the protection of our vital interests
-- than to achieve democracy in Nicaragua and to protect Nicaragua's
democratic neighbors.

This year I will be asking Congress for the means to do what must be
done for the great and good cause. As Scoop Jackson, the inspiration
for our Bipartisan Commission on Central America, once said, "In
matters of national security, the best politics is no politics."
(Applause.)

What we accomplish the year, in each challenge we face, will set our
course for the balance of the decade, indeed for the remainder of the
century. After all we've done so far, let no one say that this Nation
cannot reach the destiny of our dreams. America believes, America is
ready, America can win the race to the future -- and we shall.

The American Dream is a song of hope that rings through night winter
air. Vivid, tender music that warms our hearts when the least among
us aspire to the greatest things -- to venture a daring enterprises;
to unearth new beauty in music, literature, and art; to discover a
new universe inside a tiny silicon chip or a single human cell.

We see the dream coming true in the spirit of discovery of Richard
Cavoli -- all his life he's been enthralled by the mysteries of
medicine. And Richard, we know that the experiment that you began in
high school was launched and lost last week, yet your dream lives.
And as long as it's real, work of noble note will yet be done -- work
that could reduce the harmful effects of X rays on patients and enable
astronomers to view the golden gateways of the farthest stars.

We see the dream glow in the towering talent of a twelve year-old,
Tyrone Ford -- a child prodigy of gospel music, he has surmounted
personal adversity to become an accomplished pianist and singer. He
also directs the choirs of three churches and has performed at the
Kennedy Center.

With God as your composer, Tyrone, your music will be the music of
angels.

We see the dream being saved by the courage of the thirteen year-old,
Shelby Butler -- honor student and member of her school's safety
patrol. Seeing another girl freeze in terror before an out-of-control
school bus, she riksed her life and pulled her to safety. With bravery
like yours, Shelby, America need never fear for our future.

And we see the dream born again in the joyful compassion of a
thirteen year-old, Trevor Ferrell. Two years ago, age eleven,
watching men and women bedding down in abandoned doorways -- on
television he was watching -- Trevor left his suburban Philadelphia
home to bring blankets and food to the helpless and homeless. And
now, 250 people help him fulfill his nightly vigil.

Trevor, yours is the living spirit of brotherly love. Would you four
stand up for a moment? (Applause.)

Thank you, thank you. You are heroes of our hearts. We look at you
and know it's true -- in this land of dreams fulfilled, where greater
dreams may be imagined, nothing is impossible, no victory is beyond
our reach, no glory will every be too great.

So now, it's up to us, all of us, to prepare America for that day
when our work will pale before the greatness of America's champions
in the 21st century. The world's hopes rest with America's future;
America's hopes rest with us. So let us go forward to create our
world of tomorrow in faith, in unity, and in love.

God bless you and God bless America. (Applause.)