Ronald Reagan Speech
First State of the Union
January 26, 1982
Thank you. Mr. Speaker thank you. Thank you very much. Mr. Speaker, Mr. President,
Distinguished Members of the Congress, honored guests and fellow citizens:
Today marks my first State of the Union address to you, a constitutional duty as old as
our republic itself.
President Washington began this tradition in 1790 after reminding the nation that the
destiny of self-government and the preservation of the sacred fire of liberty
is finally staked on the experiment entrusted to the hands of the American
people. For our friends in the press, who place a high premium on accuracy, let me
say: l did not actually hear George Washington say that, but it is a matter of historic
But from this podium, Winston Churchill asked the free world to stand together against the
onslaught of aggression. Franklin Delano Roosevelt spoke of a day of infamy and summoned a
nation to arms. And Douglas MacArthur made an unforgettable farewell to a country he had
loved and served so well. Dwight Eisenhower reminded us that peace was purchased only at
the price of strength and John F. Kennedy spoke of the burden and glory that is freedom.
When I visited this chamber last year as a newcomer to Washington, critical of past
policies which I believe had failed, I proposed a new spirit of partnership between this
Congress and this Administration and between Washington and our state and local
In forging this new partnership for America we could achieve the oldest hopes of our
republics prosperity for our nation, peace for the world, and the blessings of
individual liberty for our children and, someday, for all of humanity.
Its my duty to report to you tonight on the progress that we have made in our
relations with other nations, on the foundation weve carefully laid for our economic
recovery and, finally, on a bold and spirited initiative that I believe can change the
face of American government and make it again the servant of the people.
Seldom have the stakes been higher for America. What we do and say here will make all the
difference to auto workers in Detroit, lumberjacks in the Northwest, steelworkers in
Steubenville who are in the unemployment lines, to black teen-agers in Newark and
Chicago; to hard-pressed farmers and small businessmen and to millions of everyday
Americans who harbor the simple wish of a safe and financially secure future for their
To understand the State of the Union, we must look not only at where we are and where
were going but where weve been. The situation at this time last year was truly
The last decade has seen a series of recessions. There was a recession in 1970, in 1974,
and again in the spring of 1980. Each time, unemployment increased and inflation soon
turned up again. We coined the word stagflation to describe this.
Governments response to these recessions was to pump up the money supply and
In the last six months of 1980, as an example, the money supply increased at the fastest
rate in postwar history 13 percent. Inflation remained in double digits and Government
spending increased at an annual rate of 17 percent. Interest rates reached a s taggering
21 1/2 percent. There were eight million unemployed.
Late in 1981, we sank into the present recession largely because continued high interest
rates hurt the auto industry and construction. And there was a drop in productivity and
the already high unemployment increased.
This time, however, things are different. We have an economic program in place completely
different from the artificial quick-fixes of the past. It calls for a reduction of the
rate of increase in Government spending, and already that rate has been cut n early in
half. But reduced spending alone isnt enough. Weve just implemented the first
and smallest phase of a three-year tax-rate reduction designed to stimulate the economy
and create jobs.
Already interest rates are down to 15 3/4 percent, but they must still go lower. Inflation
is down from 12.4 percent to 8.9, and for the month of December it was running at an
annualized rate of 5.2 percent.
If we had not acted as we did, things would be far worse for all Americans than they are
today. Inflation inflation, taxes and interest rates would all be higher.
A year ago, Americans faith in their governmental process was steadily declining.
Six out of ten Americans were saying they were pessimistic about their future.
A new kind of defeatism was heard. Some said our domestic problems were uncontrollable
that we had to learn to live with the-seemingly endless cycle of high inflation and high
There were also pessimistic predictions about the relationship between our Administration
and this Congress. It was said we could never work together. Well, those predictions were
wrong. The record is clear, and I believe that history will remember this as an era of
American renewal, remember this Administration as an Administration of change and remember
this Congress as a Congress of destiny.
Together, we not only cut the increase in Government spending nearly in half, we brought
about the largest tax reductions and the most sweeping changes in our tax structure since
the beginning of this century. And because we indexed future taxes to the r ate of
inflation, we took away Governments built-in profit on inflation and its hidden
incentive to grow larger at the expense of American workers.
Together, after 50 years of taking power away from the hands of the people in their states
and local communities we have started returning power and resources to them.
Together, we have cut the growth of new Federal regulations nearly in half. In 1981, there
were 23,000 fewer pages in the Federal Register, which lists new regulations, than there
were in 1980. By deregulating oil, weve come closer to achieving energy i
independence and help bring down the costs of gasoline and heating fuel.
Together, we have created an effective Federal strike force to combat waste and fraud in
Government. In just six months it has saved the taxpayers more than $2 billion, and
its only getting started.
Together, weve begun to mobilize the private sector not to duplicate wasteful and
discredited Government programs but to bring thousands of Americans into a volunteer
effort to help solve many of Americas social problems.
Together, weve begun to restore that margin of military safety that insures peace.
Our countrys uniform is being worn once again with pride.
Together we have made a new beginning, but we have only begun.
No one pretends that the way ahead will be easy. In my inaugural address last year, I
warned that the ills we suffer have come upon us over several decades. They will not
go away in days, weeks or months, but they will go away . . . because we as Americans have
the capacity now, as weve had it in the past, to do whatever needs to be done to
preserve this last and greatest bastion of freedom.
The economy will face difficult moments in the months ahead. But, the program for economic
recovery that is in place will pull the economy out of its slump and put us on the road to
prosperity and stable growth by the latter half of this year.
That is why I can report to you tonight that in the near future the State of the Union and
the economy will be better much better if we summon the strength to continue on the course
that weve charted.
And so the question: If the fundamentals are in place, what now?
Two things. First, we must understand whats happening at the moment to the economy.
Our current problems are not the product of the recovery program thats only just now
getting under way, as some would have you believe; they are the inheritance of decades of
tax and tax, and spend and
Second, because our economic problems are deeply rooted and will not respond to quick
political fixes, we must stick to our carefully integrated plan for recovery. And that
plan is based on four common-sense fundamentals: continued reduction of the growth h in
Federal spending, preserving the individual and business tax deductions that will
stimulate saving and investment, removing unnecessary Federal regulations to spark
productivity and maintaining a healthy dollar and a stable monetary policy the latter a
responsibility of the Federal Reserve System.
The only alternative being offered to this economic program is a return to the policies
that gave us a trillion-dollar debt, runaway inflation, runaway interest rates and
The doubters would have us turn back the clock with tax increases that would offset the
personal tax-rate reductions already passed by this Congress.
Raise present taxes to cut future deficits, they tell us. Well, I dont believe we
should buy that argument. There are too many imponderables for anyone to predict deficits
or surpluses several years ahead with any degree of accuracy. The budget in place when I
took office had been projected as balanced. It turned out to have one of the biggest
deficits in history. Another example of the imponderables that can make deficit
projections highly questionable: A change of only one percentage point in unemployment can
alter a deficit up or down by some $25 billion.
As it now stands, our forecasts, which were required by law to make, will show major
deficits, starting at less than $100 billion and declining, but still too high.
More important, we are making progress with the three keys to reducing deficits: economic
growth, lower interest rates and spending control. The policies we have in place will
reduce the deficit steadily, surely and, in time, completely.
Higher taxes would not mean lower deficits. If they did, how would we explain tax revenues
more than doubled just since 1976, yet in that same six-year period we ran the largest
series of deficits in our history. In 1980 tax revenues increased by $54 bil lion, and in
1980 we had one of our all-time biggest deficits.
Raising taxes wont balance the budget. It will encourage more Government spending
and less private investment. Raising taxes will slow economic growth, reduce production
and destroy future jobs, making it more difficult for those without jobs to find th em and
more likely that those who now have jobs could lose them.
So I will not ask you to try to balance the budget on the backs of the American taxpayers.
I will seek no tax increases this year and I have no intention of retreating from our
basic program of tax relief. I promised the American people to bring their taxes x rates
down and keep them down to provide them incentives to rebuild our economy, to save, to
invest in Americas future. I will stand by my word. Tonight Im urging the
American people: Seize these new opportunities to produce, to save, to invest, and t
together well make this economy a mighty engine of freedom, hope and prosperity
Now the budget deficit this year will exceed our earlier expectations. The recession did
that. It lowered revenues and increased costs. To some extent, were also victims of
our own success. Weve brought inflation down faster than we thought we could an d in
doing this weve deprived Government of those hidden revenues that occur when
inflation pushes people into higher income tax brackets. And the continued high interest
rates last year cost the Government about $5 billion more than anticipated.
We must cut out more nonessential Government spending and root out more waste, and we will
continue our efforts to reduce the number of employees in the Federal work force by
Starting in fiscal 1984, the Federal Government will assume full responsibility for the
cost of the rapidly growing Medicaid program to go along with its existing responsibility
for Medicare. As part of a financially equal swap, the states will simultane ously take
full responsibility for Aid to Families With Dependent Children and food stamps. This will
make welfare less costly and more responsive to genuine need because it will be designed
and administered closer to the grass roots and the people it ser ves.
In 1984, the Federal Government will apply the full proceeds from certain excise taxes to
a grass roots trust fund that will belong, in fair shares, to the 50 states. The total
amount flowing into this fund will be $28 billion a year.
Over the next four years, the states can use this money in either of two ways. If they
want to continue receiving Federal grants in such areas as transportation, education and
social services, they can use their trust fund money to pay for the grants or, to the
extent they choose to forgo the Federal grant programs, they can use their trust fund
money on their own, for those or other purposes. There will be a mandatory pass-through of
part of these funds to local governments.
By 1988, the states will be in complete control of over 40 Federal grant programs. The
trust fund will start to phase out, eventually to disappear, and the excise taxes will be
turned over to the states. They can then preserve, lower or raise taxes on th eir own and
fund and manage these programs as they see fit.
In a single stroke, we will be accomplishing a real realignment that will end cumbersome
administration and spiraling costs at the Federal level while we insure these programs
will be more responsive to both the people theyre meant to help and the peopl e who
pay for them.
Hand in hand with this program to strengthen the discretion and flexibility of state and
local governments, were proposing legislation for an experimental effort to improve
and develop our depressed urban areas in the 1980s and 1990s. This legislation
will permit states and localities to apply to the Federal Government for designation as
urban enterprise zones. A broad range of special economic incentives in the zones will
help attract new business, new jobs, new opportunity to Americas inner cities and
rural towns. Some will say our mission is to save free enterprise. Well, I say we must
free enterprise so that, together, we can save America.
Some will also say our states and local communities are not up to the challenge of a new
and creative partnership. Well, that might have been true 20 years ago before reforms like
reapportionment and the Voting Rights Act, the 10-year extension of which I strongly
support. Its no longer true today. This Administration has faith in state and local
governments and the constitutional balance envisioned by the Founding Fathers. We also
believe in the integrity, decency and sound good sense of grass roots Am ericans.
Our faith in the American people is reflected in another major endeavor. Our private
sector initiatives task force is seeking out successful community models of school,
church, business, union, foundation and civic programs that help community needs. Suc h
groups are almost invariably far more efficient than government in running social
Were not asking them to replace discarded and often discredited Government programs
dollar for dollar, service for service. We just want to help them perform the good works
they choose, and help others to profit by their example. Three hundred eighty-five
thousand corporations and private organizations are already working on social programs
ranging from drug rehabilitation to job training, and thousands more Americans have
written us asking how they can help. The volunteer spirit is still alive and well in
Our nations long journey towards civil rights for all our citizens once a source of
discord, now a source of pride must continue with no back sliding or slowing down. We must
and shall see that those basic laws that guarantee equal rights are preserved and, when
necessary, strengthened. Our concern for equal rights for women is firm and unshakable.
We launched a new Task Force on Legal Equity for Women, and a 50-states project that will
examine state laws for discriminatory language. And for the first time in our history a
woman sits on the highest court in the land.
So, too, the problem of crime one as real and deadly serious as any in America today it
demands that we seek transformation of our legal system, which overly protects the rights
of criminals while it leaves society and the innocent victims of crime witho ut justice.
We look forward to the enactment of a responsible Clean Air Act to increase jobs while
continuing to improve the quality of our air. We are encouraged by the bipartisan
initiative of the House and are hopeful of further progress as the Senate continues i
So far I have concentrated largely now on domestic matters. To view the State of the Union
in perspective, we must not ignore the rest of the world. There isnt time tonight
for a lengthy treatment of social or of foreign policy, I should say a subject I intend to
address in detail in the near future. A few words, however, are in order on the progress
weve made over the past year re-establishing respect for our nation around the globe
and some of the challenges and goals that we will approach in the yea r ahead.
At Ottawa and Cancun, I met with leaders of the major industrial powers and developing
nations. Now some of those I met with were a little surprised I didnt apologize for
Americas wealth. Instead I spoke of the strength of the free marketplace system a nd
how that system could help them realize their aspirations for economic development and
political freedom. I believe lasting friendships were made and the foundation was laid for
In the vital region of the Caribbean Basin, were developing a program of aid, trade
and investment incentives to promote self-sustaining growth and a better, more secure life
for our neighbors to the south. Toward those who would export terrorism and subversion in
the Caribbean and elsewhere, especially Cuba and Libya, we will act with firmness.
Our foreign policy is a policy of strength, fairness and balance. By restoring
Americas military credibility, by pursuing peace at the negotiating table wherever
both sides are willing to sit down in good faith, and by regaining the respect of
Americas allies and adversaries alike, we have strengthened our countrys
position as a force for peace and progress in the world.
When action is called for, were taking it. Our sanctions against the military
dictatorship that has attempted to crush human rights in Poland and against the Soviet
regime behind the military dictatorship clearly demonstrated to the world that America
will not conduct business as usual with the forces of oppression.
If the events in Poland continue to deteriorate, further measures will follow.
The budget plan I submit to you on Feb. 8 will realize major savings by dismantling the
Departments of Energy and Education, and by eliminating ineffective subsidies for
business. We will continue to redirect our resources to our two highest budget prior
ities: a strong national defense to keep America free and at peace and a reliable safety
net of social programs for those who have contributed and those who are in need.
Contrary to some of the wild charges you may have heard, this Administration has not and
will not turn its back on Americas elderly or Americas poor. Under the new
budget, funding for social insurance programs will be more than double the amount spent
only six years ago.
But it would be foolish to pretend that these or any programs cannot be made more
efficient and economical.
The entitlement programs that make up our safety net for the truly needy have worthy goals
and many deserving recipients. We will protect them. But theres only one way to see
to it that these programs really help those whom they were designed to help, a nd that is
to bring their spiraling costs under control.
Today we face the absurd situation of a Federal budget with three-quarters of its
expenditures routinely referred to as uncontrollable, and a large part of this
goes to entitlement programs.
Committee after committee of this Congress has heard witness after witness describe many
of these programs as poorly administered and rife with waste and fraud. Virtually every
American who shops in a local supermarket is aware of the daily abuses that t ake place in
the food stamp program, which has grown by 16,000 percent in the last 15 years. Another
example is Medicare and Medicaid, programs with worthy goals but whose costs have
increased from 11.2 billion to almost 60 billion, more than five times a s much, in just
Waste and fraud are serious problems. Back in 1980, Federal investigators testified before
one of your committees that corruption has permeated virtually every area of the
Medicare and Medicaid health care industry. One official said many of the people who
are cheating the system were very confident that nothing was going to happen to them
Well, something is going to happen. Not only the taxpayers are defrauded the people with
real dependency on these programs are deprived of what they need because available
resources are going not to the needy but to the greedy.
The time has come to control the uncontrollable.
In August we made a start. I signed a bill to reduce the growth of these programs by $44
billion over the next three years, while at the same time preserving essential services
for the truly needy. Shortly you will receive from me a message on further re forms we
intend to install some new, but others long recommended by our own Congressional
committees. I ask you to help make these savings for the American taxpayer.
The savings we propose in entitlement programs will total some $63 billion over four years
and will, without affecting Social Security, go a long way toward bringing Federal
spending under control.
But dont be fooled by those who proclaim that spending cuts will deprive the
elderly, the needy and the helpless. The Federal Government will still subsidize 95
million meals every day. Thats one out of seven of all the meals served in America.
Head St art, senior nutrition programs, and child welfare programs will not be cut from
the levels we proposed last year. More than one-half billion dollars has been proposed for
minority business assistance. And research at the National Institutes of Health will be
increased by over $100 million. While meeting all these needs, we intend to plug
unwarranted tax loopholes and strengthen the law which requires all large corporations to
pay a minimum tax.
I am confident the economic program weve put into operation will protect the needy
while it triggers a recovery that will benefit all Americans. It will stimulate the
economy, result in increased savings and provide capital for expansion, mortgages for home
building and jobs for the unemployed.
Now that the essentials of that program are in place, our next major undertaking must be a
program just as bold, just as innovative to make government again accountable to the
people, to make our system of federalism work again.
Our citizens feel theyve lost control of even the most basic decisions made about
the essential services of Government, such as schools, welfare, roads and even garbage
collection. And theyre right.
A maze of interlocking jurisdictions and levels of Government confronts average citizens
in trying to solve even the simplest of problems. They dont know where to turn for
answers, who to hold accountable, who to praise, who to blame, who to vote for or against.
The main reason for this is the overpowering growth of Federal grants-in-aid programs
during the past few decades.
In 1960, the Federal Government had 132 categorical grant programs, costing $7 billion.
When I took office, there were approximately 500, costing nearly $100 billion 13 programs
for energy, 36 for pollution control, 66 for social services, 90 for educati on. And here
in the Congress, it takes at least 166 committees just to try to keep track of them.
You know and I know that neither the President nor the Congress can properly oversee this
jungle of grants-in-aid; indeed, the growth of these grants had led to the distortion in
the vital functions of Government. As one Democratic Governor put it recent ly: The
national Government should be worrying about arms control not potholes. The
growth the growth in these Federal programs has in the words of one intergovernmental
commission made the Federal Government more pervasive, more intrusive, more unman
ageable, more ineffective and costly, and above all more accountable.
Well, lets solve this problem with a single, bold stroke the return of some $47
billion in Federal programs to state and local government, together with the means to
finance them and a transition period of nearly 10 years to avoid unnecessary disruption .
I will shortly send this Congress a message describing this program. I want to emphasize,
however, that its full details will have been worked out only after close consultation
with Congressional, state and local officials.
Now let me also note that private American groups have taken the lead in making Jan. 30 a
day of solidarity with the people of Poland so, too, the European Parliament has called
for March 21 to be an international day of support for Afghanistan. Well, I urge all
peace-loving peoples to join together on those days, to raise their voices, to speak and
pray for freedom.
Meanwhile, were working for reduction of arms and military activities. As I
announced in my address to the nation last Nov. 18, we have proposed to the Soviet Union a
far-reaching agenda for mutual reduction of military forces and have already initiated
negotiations with them in Geneva on intermediate-range nuclear forces.
In those talks it is essential that we negotiate from a position of strength. There must
be a real incentive for the Soviets to take these talks seriously. This requires that we
rebuild our defenses.
In the last decade, while we sought the moderation of Soviet power through a process of
restraint and accommodation, the Soviets engaged in an unrelenting buildup of their
The protection of our national security has required that we undertake a substantial
program to enhance our military forces.
We have not neglected to strengthen our traditional alliances in Europe and Asia, or to
develop key relationships with our partners in the Middle East and other countries.
Building a more peaceful world requires a sound strategy and the national resolve to back
it up. When radical forces threaten our friends, when economic misfortune creates
conditions of instability, when strategically vital parts of the world fall under the
shadow of Soviet power, our response can make the difference between peaceful change or
disorder and violence. Thats why weve laid such stress not only on our own
defense, but on our vital foreign assistance program. Your recent passage of the foreign
assistance act sent a signal to the world that America will not shrink from making the
investments necessary for both peace and security. Our foreign policy must be rooted in
realism, not naivet or self-delusion.
A recognition of what the Soviet empire is about is the starting point. Winston Churchill,
in negotiating with the Soviets, observed that they respect only strength and resolve in
their dealings with other nations.
Thats why weve moved to reconstruct our national defenses. We intend to keep
the peace we will also keep our freedom.
We we have made pledges of a new frankness in our public statements and worldwide
broadcasts. In the face of a climate of falsehood and misinformation, weve promised
the world a season of truth the truth of our great civilized ideas: individual liberty,
representative government, the rule of law under God.
Weve never needed walls, or mine fields or barbwire to keep our people in. Nor do we
declare martial law to keep our people from voting for the kind of Government they want.
Yes, we have our problems; yes, were in a time of recession. And its true,
theres no quick fix, as I said, to instantly end the tragic pain of unemployment.
But we will end it the process has already begun and well see its effect as the year
We speak with pride and admiration of that little band of Americans who overcame
insuperable odds to set this nation on course 200 years ago. But our glory didnt end
with them Americans ever since have emulated their deeds.
We dont have to turn to our history books for heroes. Theyre all around us.
One who sits among you here tonight epitomized that heroism at the end of the longest
imprisonment ever inflicted on men of our armed forces. Who will ever forget that night
when en we waited for television to bring us the scene of that first plane landing at
Clark Field in the Philippines bringing our P.O.W.s home. The plane door opened and
Jeremiah Denton came slowly down the ramp. He caught sight of our flag, saluted it, said,
God bless America, and then thanked us for bringing him home.
Just just two weeks ago, in the midst of a terrible tragedy on the Potomac, we saw again
the spirit of American heroism at its finest the heroism of dedicated rescue workers
saving crash victims from icy waters.
And we saw the heroism of one of our young Government employees, Lenny Skutnik, who, when
he saw a woman lose her grip on the helicopter line, dived into the water and dragged her
And then there are countless quiet, everyday heroes of American life parents who sacrifice
long and hard so their children will know a better life than theyve known; church
and civic volunteers who help to feed, clothe, nurse and teach the needy; millions
whove made our nation, and our nations destiny, so very special unsung heroes
who may not have realized their own dreams themselves but then who reinvest those dreams
in their children.
Dont let anyone tell that Americas best days are behind her that the American
spirit has been vanquished. Weve seen it triumph too often in our lives to stop
believing in it now.
A hundred and one hundred and twenty years ago the greatest of all our Presidents
delivered his second State of the Union Message in this chamber. We cannot escape
history, Abraham Lincoln warned. We of this Congress and this Administration
will be re membered in spite of ourselves. The trial through which we pass
will light us down in honor or dishonor to the latest generation.
Well, that President and that Congress did not fail the American people. Together, they
weathered the storm and preserved the union.
Let it be said of us that we, too did not fail; that we, too, worked together to bring
America through difficult times. Let us so conduct ourselves that two centuries from now,
another Congress and another President, meeting in this chamber as were meet , will
speak of us with pride, saying that we met the test and preserved for them in their day
the sacred flame of liberty this last, best hope of man on Earth.