Mr. President, Mr. Speaker

When Presidents speak to the Congress and the nation from this podium, they typically comment on the full range of challenges and opportunities that face us. But these are not ordinary times. For all the many tasks that require our attention, one calls on us to focus, unite, and act. Together, we must make our economy thrive once again.

It has been too long -- at least three decades -- since a President has challenged Americans to join him on our great national journey, not merely to consume the bounty of today but to invest for a much greater one tomorrow.

Nations, like individuals, must ultimately decide how they wish to conduct themselves -- how they wish to be thought of by those with whom they live, and, later, how they wish to be judged by history. Like every man and woman, they must decide whether they are prepared to rise to the occasions history presents them.

We have always been a people of youthful energy and daring spirit. And at this historic moment, as communism has fallen, as freedom is spreading around the world, as a global economy is taking shape before our eyes, Americans have called for change -- and now it is up to those of us in this room to deliver.

Our nation needs a new direction. Tonight, I present to you our comprehensive plan to set our nation on that new course.

I believe we will find our new direction in the basic values that brought us here: opportunity, individual responsibility, community, work, family, and faith. We need to break the old habits of both political parties in Washington. We must say that there can be no more something for nothing, and we are all in this together.

The conditions which brought us to this point are well known. Two decades of low productivity and stagnant wages; persistent unemployment and underemployment; years of huge government deficits and declining investment in our future; exploding health care costs, and lack of coverage; legions of poor children; educational and job training opportunities inadequate to the demands of a high wage, high growth economy. For too long we drifted without a strong sense of purpose, responsibility or community, and

our political system too often was paralyzed by special interest groups, partisan bickering and the sheer complexity of our problems.

I know we can do better, because ours remains the greatest nation on earth, the world's strongest economy, and the world's only military superpower. If we have the vision, the will and the heart to make the changes we must, we will enter the 21st century with possibilities our parents could not even have imagined, having secured the American dream for ourselves and future generations.

I well remember, twelve years ago Ronald Reagan stood at this podium and told the American people that if our debt were stacked in dollar bills, the stack would reach sixty-seven miles into space. Today, that stack would reach two hundred and sixty-seven miles.

I tell you this not to assign blame for this problem. There is plenty of blame to go around -- in both branches of the government and both parties. The time for blame has come to an end. I came here to accept responsibility; I want you to accept responsibility for the future of this country, and if we do it right, I don't care who gets the credit for it.

Our plan has four fundamental components:

First, it reverses our economic decline, by jump- starting the economy in the short term and investing in our people, their jobs and their incomes in the long term.

Second, it changes the rhetoric of the past into the actions of the present, by honoring work and families in every part of our lives.

Third, it substantially reduces the federal deficit, honestly and credibly.

Finally, it earns the trust of the American people by paying for these plans first with cuts in government waste and inefficiency -- cuts, not gimmicks, in government spending -- and by fairness, for a change, in the way the burden is borne.

Tonight, I want to talk about what government can do, because I believe our government must do more for the hard-working people who pay its way. But let me say first: government cannot do this alone. The private sector is the engine of economic growth in America. And every one of us can be an engine of change in our own lives. We've got to give people more opportunity, but we must also demand more responsibility in return.

Our immediate priority is to create jobs, now. Some say we're in a recovery. Well, we all hope so. But we're simply not creating jobs. And there is no recovery worth its salt that does not begin with new jobs.

To create jobs and guarantee a strong recovery, I call on Congress to enact an immediate jobs package of over 30 billion dollars. We will put people to work right now and create half a million jobs: jobs that will rebuild our highways and airports, renovate housing, bring new life to our rural towns, and spread hope and opportunity among our nation's youth with almost 700, 000 jobs for them this summer alone. And I invite America's business leaders to join us in this effort, so that together we can create a million summer jobs in cities and poor rural areas for our young people.

Second, our plan looks beyond today's business cycle, because our aspirations extend into the next century. The heart of our plan deals with the long term. It has an investment program designed to increase public and private investment in areas critical to our economic future. And it has a deficit reduction program that will increase savings available for private sector investment, lower interest rates, decrease the percentage of the federal budget claimed by interest payments, and decrease the risk of financial market disruptions that could adversely affect the economy.

Over the long run, all this should result in a higher rate of economic growth, improved productivity, higher wages, more high-quality jobs and an improved economic competitive position in the global economy.

In order to accomplish public investment and deficit reduction, government spending is being cut and taxes are being increased. Our spending cuts were carefully thought through to try to minimize any economic impact, to capture the peace dividend for investment purposes, and to switch the balance in the budget from consumption to investment. The tax increases and spending cuts were both designed to assure that the cost of this historic program to face and deal with our problems is borne by those who could most readily afford that cost.

Our plan is designed to improve the health of American business through lower interest rates, improved infrastructure, better trained workers, and a stronger middle class. Because small businesses generate most of our nation's jobs, our plan includes the boldest targeted incentives for small business in history. We propose a permanent investment tax credit for small business, and new rewards for entrepreneurs who take risks. We will give small business access to the brilliant technologies of our time and to the credit they need to prosper and flourish.

With a new network of community development banks, and one billion dollars to make the dream of enterprise zones real, we will begin to bring new hope and new jobs to storefronts and factories from South Boston to South Texas to South-Central Los Angeles.

Our plan invests in our roads, bridges, transit facilities; in high-speed railways and high-tech information systems; and in the most ambitious environmental clean-up of our time.

On the edge of the new century, economic growth depends as never before on opening up new markets overseas. And so we will insist on fair trade rules in international markets.

A part of our national economic strategy must be to expand trade on fair terms, including successful completion of the latest round of world trade talks. A North American Free Trade Agreement with appropriate safeguards for workers and the environment. At the same time, we need an aggressive attempt to create the hi-tech jobs of the future; special attention to troubled industries like aerospace and airlines, and special assistance to displaced workers like those in our defense industry.

I pledge that business, government and labor will work together in a partnership to strengthen America for a change.

But all of our efforts to strengthen the economy will fail unless we take bold steps to reform our health care system. America's businesses will never be strong; America's families will never be secure; and America's government will never be solvent until we tackle our health care crisis.

The rising costs and the lack of care are endangering both our economy and our lives. Reducing health care costs will liberate hundreds of billions of dollars for investment and growth and new jobs. Over the long run, reforming health care is essential to reducing our deficit and expanding investment.

Later this spring, I will deliver to Congress a comprehensive plan for health care reform that will finally get costs under control. We will provide security to all our families, so that no one will be denied the coverage they need. We will root out fraud and outrageous charges, and make sure that paperwork no longer chokes you or your doctor. And we will maintain American standards -- the highest quality medical care in the world and the choices we demand and deserve. The American people expect us to deal with health care. And we must deal with it now.

Perhaps the most fundamental change our new direction offers is its focus on the future and the investments we seek in our children.

Each day we delay carries a dear cost. Half our two-year-olds don't receive immunizations against deadly diseases. Our plan will provide them for every eligible child. And we'll save ten dollars for every one we'll spend by eliminating preventable childhood diseases.

The Women, Infants, and Children nutrition program will be expanded so that every expectant mother who needs our help receives it.

Head Start -- a program that prepares children for school -- is a success story. It saves money, but today it reaches only one-third of all eligible children. Under our plan, we will cover every eligible child. Investing in Head Start and WIC is not only the right thing, it's the smart thing. For every dollar we invest today, we save three tomorrow.

America must ask more of our students, our teachers, and our schools. And we must give them the resources they need to meet high standards.

We will bring together business and schools to establish new apprenticeships, and give young people the skills they need today to find productive jobs tomorrow.

Lifelong learning will benefit workers throughout their careers. We must create a new unified worker training system, so that workers receive training regardless of why they lost their jobs.

Our national service program will make college loans available to all Americans, and challenge them to give something back to their country -- as teachers, police officers, community service workers. This will be an historic change on a scale with the creation of the Land Grant Colleges and the G. I. Bill. A hundred years from now, historians who owe their education to our plan for national service will salute your vision.

We believe in jobs, we believe in learning, and we believe in rewarding work. We believe in restoring the values that make America special.

There is dignity in all work, and there must be dignity for all workers. To those who heal our sick, care for our children, and do our most tiring and difficult jobs, our new direction makes this solemn commitment:

By expanding the Earned Income Tax Credit, we will make history: We will help reward work for millions of working poor Americans. Our new direction aims to realize a principle as powerful as it is simple: If you work full time, you should not be poor.

Later this year, we will offer a plan to end welfare as we know it. No one wants to change the welfare system as much as those who are trapped by the welfare system.

We will offer people on welfare the education, training, child care and health care they need to get back on their feet. Then, after two years, they must get back to work -- in private business if possible; in public service, if necessary. It's time to end welfare as a way of life.

Our next great goal is to strengthen American families.

We'll ask fathers and mothers to take more responsibility for their children. And we'll crack down on deadbeat parents who won't pay their child support.

We want to protect our families against violent crime which terrorizes our people and tears apart our communities. We must pass a tough crime bill.

We need to put 100, 000 more police on the street, provide boot camps for first-time non-violent offenders, and put hardened criminals behind bars. We have a duty to keep guns out of the hands of criminals. If you pass the Brady Bill, I'll sign it.

To make government work for middle-class taxpayers and not the special interests, we must reform our political system.

I'm asking Congress to enact real campaign finance reform. Let's reduce the power of special interests and increase the participation of the people. We should end the tax deduction for special interest lobbying and use the money to help clean up the political system. And we should quickly enact legislation to force lobbyists to disclose their activities.

But to revolutionize government we have to insure that it lives within its means. And that starts at the top -- with the White House. In the last few weeks, I have cut the White House staff by twenty-five percent, saving ten million dollars. I ordered administrative cuts in the budgets of agencies and departments, I cut the federal bureaucracy by 100, 000 positions, for combined savings of nine billion dollars. It's time for government to be as frugal as any household in America. That's why I congratulate the Congress

for taking similar steps to cut its costs today. Together, we can show the American people that we have heard their call for change.

But we can go further. Tonight, I call for an across-the-board freeze in federal government salaries for one year. Thereafter, federal salaries will rise at a rate lower than the rate of inflation.

We must reinvent government to make it work again. We'll push innovative education reform to improve learning, not just spend more money. We'll use the Superfund to clean up pollution, not just increase lawyers' incomes. We'll use federal banking regulators, not just to protect the security and safety of our financial institutions, but to break the credit crunch. And we'll change the whole focus of our poverty programs from entitlement to empowerment.

For years, there has been a lot of talk about the deficit, but very few credible efforts to deal with it. This plan does. Our plan tackles the budget deficit -- seriously and over the long term. We will put in place one of the biggest deficit reductions and the biggest change of federal priorities in our history at the same time.

We are not cutting the deficit because the experts tell us to do so. We are cutting the deficit so that your family can afford a college education for your children. We are cutting the deficit so that your children will someday be able to buy a home of their own. We are cutting the deficit so that your company can invest in retraining its workers and retooling its factories. We are cutting the deficit so that government can make the investments that help us become stronger and smarter and safer.

If we do not act now, we will not recognize this country ten years from now. Ten years from now, the deficit will have grown to 635 billion dollars a year; the national debt will be almost 80 percent of our gross domestic product. Paying the interest on that debt will be the costliest government program of all, and we will continue to be the world's largest debtor, depending on foreign funds for a large part of our nation's investments.

Our budget will, by 1997, cut 140 billion dollars from the deficit -- one of the greatest real spending cuts by an American president. We are making more than 150 difficult, painful reductions which will cut federal spending by 246 billion dollars. We are eliminating programs that are no longer needed, such as nuclear power research and development. We are slashing subsidies and cancelling wasteful projects. Many of these programs were justified in their time. But if we're going to start new plans, we must eliminate old ones.

Government has been good at building programs, now we must show that we can limit them.

As we restructure American military forces to meet the new threats of the post-Cold War world, we can responsibly reduce our defense budget. But let no one be in any doubt: The men and women who serve under the American flag will be the best trained, best equipped, best prepared fighting force in the world, so long as I am President.

Backed by a leaner and more effective national defense and a stronger economy, our nation will be prepared to lead a world challenged by ethnic conflict, the proliferation of weapons of mass destruction, the global democratic revolution, and the health of our environment.

Our economic plan is ambitious, but it is necessary for the continued greatness of our country. And it will be paid for fairly -- by cutting government, by asking the most of those who benefitted most in the past --by asking more Americans to contribute today so that all Americans can do better tomorrow.

For the wealthiest -- those earning more than 180, 000 dollars per year, I ask you to raise the top rate for federal income taxes from 31 percent to 36

percent. Our plan recommends a ten percent surtax on incomes over 250, 000 dollars a year. And we will close the loopholes that let some get away without paying any tax at all.

For businesses with taxable incomes over ten million dollars, we will raise the corporate tax rate to 36 percent. And we will cut the deduction for business entertainment.

Our plan attacks tax subsidies that reward companies that ship jobs overseas. And we will ensure that, through effective tax enforcement, foreign corporations who make money in America pay the taxes they owe to America.

Middle-class Americans should know: You're not going alone any more; you're not going first; and you're no longer going to pay more and get less. Ninety-eight point eight percent of America's families will have no increase in their income tax rates. Only the wealthiest one point two percent will see their rates rise.

Let me be clear: There will be no new cuts in benefits from Medicare for beneficiaries. There will be cuts in payments to providers: doctors, hospitals, and labs, as a way of controlling health care costs. These cuts are only a stop-gap until we reform the whole health care system. Let me repeat

that, because it matters to me, as I know it matters to you: This plan will not make new cuts in Medicare benefits for any beneficiary.

The only change we are making in Social Security is to ask those older Americans with higher incomes, who do not rely solely on Social Security to get by, to contribute more. This change will not affect eighty percent of Social Security recipients. If you do not pay taxes on Social Security now, you will not pay taxes on Social Security under this plan.

Our plan includes a tax on energy as the best way to provide us with new revenue to lower the deficit and invest in our people. Moreover, unlike other taxes, this one reduces pollution, increases energy efficiency, and eases our dependence on oil from unstable regions of the world.

Taken together, these measures will cost an American family earning 40 thousand dollars a year less than 17 dollars a month. And because of other programs we will propose, families earning less than 30, 000 dollars a year will pay virtually no additional tax at all. Because of our publicly stated determination to reduce the deficit, interest rates have fallen since the election. That means that, for the middle class, the increases in energy costs will be more than offset by lower interest costs for mortgages, consumer

loans and credit cards. This is a wise investment for you and for your country.

I ask all Americans to consider the cost of not changing, of not choosing a new direction. Unless we have the courage to start building our future and stop borrowing from it, we are condemning ourselves to years of stagnation, interrupted only by recession; to slow growth in jobs, no growth in incomes, and more debt and disappointment.

Worse yet -- unless we change, unless we reduce the deficit, increase investment, and raise productivity so we can generate jobs -- we will condemn our children and our children's children to a lesser life and a diminished destiny.

Tonight, the American people know we must change. But they are also likely to ask whether we have the fortitude to make those changes happen.

They know that, as soon as we leave this Chamber, the special interests will be out in force, trying to stop the changes we seek. The forces of conventional wisdom will offer a thousand reasons why it can't be done.

And our people will be watching and wondering to see if it's going to be business as usual again.

So we must scale the walls of their skepticism, not with our words, but by our deeds. After so many years of gridlock and indecision, after so many hopeful beginnings and so few promising results, Americans will be harsh in their judgments of us if we fail to seize this moment.

This economic plan cannot please everybody. If this package is picked apart, there will be something that will anger each of us. But, if it is taken as a whole, it will help all of us


Resist the temptation to focus only on a spending cut you don't like or some investment not made. And nobody likes tax increases. But let's face facts: For 20 years incomes have stalled. For years, debt has exploded. We can no longer afford to deny reality. We must play the hand we were dealt.

The test of our program cannot simply be: What's in it for me? The question must be: What's in it for us?

If we work hard -- and work together -- if we rededicate ourselves to strengthening families, creating jobs, rewarding work, and reinventing government, we can lift America's fortunes once again.

Tonight I ask everyone in this Chamber -- and every American -- to look into their hearts, spark their hopes, and fire their imaginations. There is so much good, so much possibility, so much excitement in our nation. If we act boldly, as leaders should, our legacy will be one of progress and prosperity. This, then, is America's new direction. Let us summon the courage to seize the day.

Thank you very much. Good night. And may God bless America.