Mr. Speaker and Mr. President, distinguished Members of Congress, honored guests, and fellow citizens: Thank you very much for that warm reception. You know, with the big buildup this address has had, I wanted to make sure it would be a big hit, but I couldn't convince Barbara to deliver it for me. I see the Speaker and the Vice President are laughing.

  They saw what I did in Japan, and they're just happy they're sitting behind me. I mean to speak tonight of big things, of big changes and the promises they hold, and of some big problems and how, together, we can solve them and move our country forward as the undisputed leader of the age. We gather tonight at a dramatic and deeply promising time in our history and in the history of man on Earth.

  For in the past 12 months, the world has known changes of almost Biblical proportions. And even now, months after the failed coup that doomed a failed system, I'm not sure we've absorbed the full impact, the full import of what happened. But communism died this year. Even as President, with the most fascinating possible vantage point, there were times when I was so busy managing progress and helping to lead change that I didn't always show the joy that was in my heart.

  But the biggest thing that has happened in the world in my life, in our lives, is this: By the grace of God, America won the cold war. I mean to speak this evening of the changes that can take place in our country, now that we can stop making the sacrifices we had to make when we had an avowed enemy that was a superpower.

  Now we can look homeward even more and move to set right what needs to be set right. I will speak of those things. But let me tell you something I've been thinking these past few months. It's a kind of rollcall of honor. For the cold war didn't end; it was won. And I think of those who won it, in places like Korea and Vietnam.

  And some of them didn't come back. Back then they were heroes, but this year they were victors. The long rollcall, all the G.I. Joes and Janes, all the ones who fought faithfully for freedom, who hit the ground and sucked the dust and knew their share of horror. This may seem frivolous, and I don't mean it so, but it's moving to me how the world saw them.

  The world saw not only their special valor but their special style: their rambunctious, optimistic bravery, their do-or-die unity unhampered by class or race or region. What a group we've put forth, for generations now, from the ones who wrote "Kilroy was here" on the walls of the German stalags to those who left signs in the Iraqi desert that said, "I saw Elvis." What a group of kids we've sent out into the world.

  And there's another to be singled out, though it may seem inelegant, and I mean a mass of people called the American taxpayer. No one ever thinks to thank the people who pay a country's bill or an alliance's bill. But for half a century now, the American people have shouldered the burden and paid taxes that were higher than they would have been to support a defense that was bigger than it would have been if imperial communism had never existed.

  But it did; doesn't anymore. And here's a fact I wouldn't mind the world acknowledging: The American taxpayer bore the brunt of the burden and deserves a hunk of the glory. So now, for the first time in 35 years, our strategic bombers stand down. No longer are they on 'round-the-clock alert. Tomorrow our children will go to school and study history and how plants grow.

  And they won't have, as my children did, air raid drills in which they crawl under their desks and cover their heads in case of nuclear war. My grandchildren don't have to do that and won't have the bad dreams children had once, in decades past. There are still threats. But the long, drawn-out dread is over.

  A year ago tonight, I spoke to you at a moment of high peril. American forces had just unleashed Operation Desert Storm. And after 40 days in the desert skies and 4 days on the ground, the men and women of America's Armed Forces and our allies accomplished the goals that I declared and that you endorsed: We liberated Kuwait.

  Soon after, the Arab world and Israel sat down to talk seriously and comprehensively about peace, an historic first. And soon after that, at Christmas, the last American hostages came home. Our policies were vindicated. Much good can come from the prudent use of power. And much good can come of this: A world once divided into two armed camps now recognizes one sole and preeminent power, the United States of America.

  And they regard this with no dread. For the world trusts us with power, and the world is right. They trust us to be fair and restrained. They trust us to be on the side of decency. They trust us to do what's right. I use those words advisedly. A few days after the war began, I received a telegram from Joanne Speicher, the wife of the first pilot killed in the Gulf, Lieutenant Commander Scott Speicher.

  Even in her grief, she wanted me to know that some day when her children were old enough, she would tell them "that their father went away to war because it was the right thing to do." And she said it all: It was the right thing to do. And we did it together. There were honest differences right here in this Chamber.

  But when the war began, you put partisanship aside, and we supported our troops. This is still a time for pride, but this is no time to boast. For problems face us, and we must stand together once again and solve them and not let our country down. Two years ago, I began planning cuts in military spending that reflected the changes of the new era.

  But now, this year, with imperial communism gone, that process can be accelerated. Tonight I can tell you of dramatic changes in our strategic nuclear force. These are actions we are taking on our own because they are the right thing to do. After completing 20 planes for which we have begun procurement, we will shut down further production of the B - 2 bombers.

  We will cancel the small ICBM program. We will cease production of new warheads for our sea-based ballistic missiles. We will stop all new production of the Peacekeeper missile. And we will not purchase any more advanced cruise missiles. This weekend I will meet at Camp David with Boris Yeltsin of the Russian Federation.

  I've informed President Yeltsin that if the Commonwealth, the former Soviet Union, will eliminate all land-based multiple-warhead ballistic missiles, I will do the following: We will eliminate all Peacekeeper missiles. We will reduce the number of warheads on Minuteman missiles to one and reduce the number of warheads on our sea-based missiles by about one-third.

  And we will convert a substantial portion of our strategic bombers to primarily conventional use. President Yeltsin's early response has been very positive, and I expect our talks at Camp David to be fruitful. I want you to know that for half a century, American Presidents have longed to make such decisions and say such words.

  But even in the midst of celebration, we must keep caution as a friend. For the world is still a dangerous place. Only the dead have seen the end of conflict. And though yesterday's challenges are behind us, tomorrow's are being born. The Secretary of Defense recommended these cuts after consultation with the Joint Chiefs of Staff.

  And I make them with confidence. But do not misunderstand me. The reductions I have approved will save us an additional $50 billion over the next 5 years. By 1997, we will have cut defense by 30 percent since I took office. These cuts are deep, and you must know my resolve: This deep, and no deeper. To do less would be insensible to progress, but to do more would be ignorant of history.

  We must not go back to the days of "the hollow army." We cannot repeat the mistakes made twice in this century when armistice was followed by recklessness and defense was purged as if the world were permanently safe. I remind you this evening that I have asked for your support in funding a program to protect our country from limited nuclear missile attack.

  We must have this protection because too many people in too many countries have access to nuclear arms. And I urge you again to pass the Strategic Defense Initiative, SDI. There are those who say that now we can turn away from the world, that we have no special role, no special place. But we are the United States of America, the leader of the West that has become the leader of the world.

  And as long as I am President, I will continue to lead in support of freedom everywhere, not out of arrogance, not out of altruism, but for the safety and security of our children. This is a fact: Strength in the pursuit of peace is no vice; isolationism in the pursuit of security is no virtue. And now to our troubles at home.

  They're not all economic; the primary problem is our economy. There are some good signs. Inflation, that thief, is down. And interest rates are down. But unemployment is too high, some industries are in trouble, and growth is not what it should be. Let me tell you right from the start and right from the heart, I know we're in hard times.

  But I know something else: This will not stand. In this Chamber, in this Chamber we can bring the same courage and sense of common purpose to the economy that we brought to Desert Storm. And we can defeat hard times together. I believe you'll help. One reason is that you're patriots, and you want the best for your country.

  And I believe that in your hearts you want to put partisanship aside and get the job done because it's the right thing to do. The power of America rests in a stirring but simple idea, that people will do great things if only you set them free. Well, we're going to set the economy free. For if this age of miracles and wonders has taught us anything, it's that if we can change the world we can change America.

  We must encourage investment. We must make it easier for people to invest money and create new products, new industries, and new jobs. We must clear away the obstacles to growth: high taxes, high regulation, redtape, and yes, wasteful Government spending. None of this will happen with a snap of the fingers, but it will happen.

  And the test of a plan isn't whether it's called new or dazzling. The American people aren't impressed by gimmicks; they're smarter on this score than all of us in this room. The only test of a plan is: Is it sound, and will it work? We must have a short-term plan to address our immediate needs and heat up the economy.

  And then we need a longer term plan to keep combustion going and to guarantee our place in the world economy. There are certain things that a President can do without Congress, and I'm going to do them. I have, this evening, asked major Cabinet departments and Federal agencies to institute a 90-day moratorium on any new Federal regulations that could hinder growth.

  In those 90 days, major departments and agencies will carry out a top-to-bottom review of all regulations, old and new, to stop the ones that will hurt growth and speed up those that will help growth. Further, for the untold number of hard-working, responsible American workers and business men and women who've been forced to go without needed bank loans, the banking credit crunch must end.

  I won't neglect my responsibility for sound regulations that serve the public good, but regulatory overkill must be stopped. And I've instructed our Government regulators to stop it. I have directed Cabinet departments and Federal agencies to speed up progrowth expenditures as quickly as possible. This should put an extra $10 billion into the economy in the next 6 months.

  And our new transportation bill provides more than $150 billion for construction and maintenance projects that are vital to our growth and well-being. And that means jobs building roads, jobs building bridges, and jobs building railways. And I have, this evening, directed the Secretary of the Treasury to change the Federal tax withholding tables.

  With this change, millions of Americans from whom the Government withholds more than necessary can now choose to have the Government withhold less from their paychecks. Something tells me a number of taxpayers may take us up on this one. This initiative could return about $25 billion back into our economy over the next 12 months, money people can use to help pay for clothing, college, or to get a new car.

  Finally, working with the Federal Reserve, we will continue to support monetary policy that keeps both interest rates and inflation down. Now, these are the things I can do. And now, Members of Congress, let me tell you what you can do for your country. You must pass the other elements of my plan to meet our economic needs.

  Everyone knows that investment spurs recovery. I am proposing this evening a change in the alternative minimum tax and the creation of a new 15-percent investment tax allowance. This will encourage businesses to accelerate investment and bring people back to work. Real estate has led our economy out of almost all the tough times we've ever had.

  Once building starts, carpenters and plumbers work; people buy homes and take out mortgages. My plan would modify the passive loss rule for active real estate developers. And it would make it easier for pension plans to purchase real estate. For those Americans who dream of buying a first home but who can't quite afford it, my plan would allow first-time homebuyers to withdraw savings from IRA's without penalty and provide a $5,000 tax credit for the first purchase of that home.

  And finally, my immediate plan calls on Congress to give crucial help to people who own a home, to everyone who has a business or a farm or a single investment. This time, at this hour, I cannot take no for an answer. You must cut the capital gains tax on the people of our country. Never has an issue been more demagogued by its opponents.

  But the demagogs are wrong. They are wrong, and they know it. Sixty percent of the people who benefit from lower capital gains have incomes under $50,000. A cut in the capital gains tax increases jobs and helps just about everyone in our country. And so, I'm asking you to cut the capital gains tax to a maximum of 15.4 percent.

  I'll tell you, those of you who say, "Oh, no, someone who's comfortable may benefit from that," you kind of remind me of the old definition of the Puritan who couldn't sleep at night, worrying that somehow, someone somewhere was out having a good time. The opponents of this measure and those who have authored various so-called soak-the-rich bills that are floating around this Chamber should be reminded of something: When they aim at the big guy, they usually hit the little guy.

  And maybe it's time that stopped. This, then, is my short-term plan. Your part, Members of Congress, requires enactment of these commonsense proposals that will have a strong effect on the economy without breaking the budget agreement and without raising tax rates. While my plan is being passed and kicking in, we've got to care for those in trouble today.

  I have provided for up to $4.4 billion in my budget to extend Federal unemployment benefits. And I ask for congressional action right away. And I thank the committee. Well, at last. Let's be frank. Let's be frank. Let me level with you. I know and you know that my plan is unveiled in a political season. I know and you know that everything I propose will be viewed by some in merely partisan terms.

  But I ask you to know what is in my heart. And my aim is to increase our Nation's good. I'm doing what I think is right, and I am proposing what I know will help. I pride myself that I'm a prudent man, and I believe that patience is a virtue. But I understand that politics is, for some, a game and that sometimes the game is to stop all progress and then decry the lack of improvement. But let me tell you: Far more important than my political future and far more important than yours is the well-being of our country.

  Members of this Chamber are practical people, and I know you won't resent some practical advice. When people put their party's fortunes, whatever the party, whatever side of this aisle, before the public good, they court defeat not only for their country but for themselves. And they will certainly deserve it.

  I submit my plan tomorrow, and I'm asking you to pass it by March 20th. And I ask the American people to let you know they want this action by March 20th. From the day after that, if it must be, the battle is joined. And you know, when principle is at stake I relish a good, fair fight. I said my plan has two parts, and it does.

  And it's the second part that is the heart of the matter. For it's not enough to get an immediate burst. We need long-term improvement in our economic position. We all know that the key to our economic future is to ensure that America continues as an economic leader of the world. We have that in our power.

  Here, then, is my long-term plan to guarantee our future. First, trade: We will work to break down the walls that stop world trade. We will work to open markets everywhere. And in our major trade negotiations, I will continue pushing to eliminate tariffs and subsidies that damage America's farmers and workers.

  And we'll get more good American jobs within our own hemisphere through the North American free trade agreement and through the Enterprise for the Americas Initiative. But changes are here, and more are coming. The workplace of the future will demand more highly skilled workers than ever, more people who are computer-literate, highly educated.

  We must be the world's leader in education. And we must revolutionize America's schools. My America 2000 strategy will help us reach that goal. My plan will give parents more choice, give teachers more flexibility, and help communities create new American schools. Thirty States across the Nation have established America 2000 programs.

  Hundreds of cities and towns have joined in. Now Congress must join this great movement: Pass my proposals for new American schools. That was my second long-term proposal, and here's my third: We must make commonsense investments that will help us compete, long-term, in the marketplace. We must encourage research and development.