May 22, 1986

It's an honor to be able to speak to you, the members of the American Retail Federation. You represent a vital sector of our economy -- one that employs 18 million Americans -- and I want you to know how much I appreciate the support that you've given to our administration from the very first. It's been a while now, and we're getting to be the best kind of friends: old friends. We can look back on many a battle that we've been through together -- and isn't it nice to be able to say that most of the time, we've won?

When we took office our nation saw orbiting interest rates and stratospheric inflation and a mothballed military. Not anymore, not by a long shot. With your help we've slashed tax rates, cut back needless regulations, liberating the entrepreneurial genius of the American people and giving our nation one of the strongest periods of economic growth in postwar history. Think of the products the new spirit of enterprise has put on our shelves -- or your shelves, products undreamed of just a few years ago: personal computers, compact disc players, new fabrics, even teddy bears that tell entire stories. [Laughter] We've begun rebuilding our military. You know, in those unusual gifts, I have to tell you, someone gave me one the other day -- it was new to me. It was a little duck. And if you squeezed it, it laid jellybeans. [Laughter]

But we've begun rebuilding our military and regaining the trust of our allies and the respect of our adversaries. And we've made strides toward getting deficit spending under control once and for all. Of course, we've faced opposition every step of the way -- just look at the budget the House of Representatives passed last week. What does that budget call for? You guessed it: weakening our defenses and raising our taxes. There's something about this that would be ridiculous if it weren't so sad. For nearly 5.5 years now the American people have been repudiating the old policies of high taxes at home and weakness abroad, but the opposition keeps coming back with the same old thing. To borrow a comparison from retailing, the opposition is beginning to look as out of it as a department store that stocks wide ties and and bell-bottom pants. The American people just aren't buying; neither is the Senate, and neither am I.

In addition to this budget, the Democratic leadership in the House has put together a trade bill -- well, rather, I should say, an antitrade bill -- that is openly and rankly political. This antitrade bill, this protectionist legislation, would have our nation violate the most basic tenets of free and fair international trade. Indeed, it would plunge the world into a trade war, eroding our relations with our allies and free world trading partners. Economic growth in America and around the world would be the casualty. And again, there's a certain sense in which this effort on the part of the opposition is embarrassingly old-fashioned and out of date. We've known since the Smoot-Hawley tariffs of 1930 that protectionist legislation doesn't work, that it means less world trade and less prosperity here at home. Now, I'm one of the few around here maybe that has a firsthand memory of trying to get a job in the Great Depression. But the Smoot-Hawley tariff that we adopted spread that Depression worldwide and lengthened out by decades our ability to recover.

So, our administration has worked to open markets, not to close them, and to keep those markets fair. Where trading partners appear to be cheating Americans, we're taking action. Already, we have a number of investigations underway. But the House bill would cost American consumers billions and undercut the millions of American jobs connected with foreign trade. And believe me, I don't intend to let that happen. And I'd like to ask your help in letting the Congress know that the answer is more world trade, not less. And I don't think I can ask if I need to count on you -- or can count on you. I'm taking that for granted.

But these budget and antitrade bills are rearguard actions; they're manifestations of the past. The future belongs to others, to those like you who believe in using these next 2.5 years to lock in the gains that we've already made in working to institutionalize this second American revolution of hope and opportunity. We've already seen a giant step in this direction with the dramatic breakthrough of tax reform in the Congress. And would I be wrong if I thought that maybe the Secretary of the Treasury [James A. Baker III] has already talked to you about tax reform? [Laughter]

A consensus is forming in America around low-tax rate, progrowth policies. Looking back on the redistributionist, high-tax policies of the late seventies, it now seems like the Dark Ages. The old politics of envy are over. As the tax reform bill now before the Senate makes clear, by cutting tax rates every American can come out a winner. And pulling together, rather than pulling apart, we can all contribute to fulfilling America's destiny of greatness.

I must admit there were times in this process, as tax reform wended its way through the sometimes convoluted passageways of Congress, that even I had some momentary doubts. I told a group last night that it was a little like the time Marilyn Monroe, the late Marilyn Monroe, met Albert Einstein. And Marilyn grabbed him by the arm and said, ``Let's get married.'' And Einstein looked at her and replied, ``But, my dear, what if our children had my looks and your brains?'' [Laughter] As I said, there were moments of concern. But thanks to the farsighted, imaginative leadership of Bob Packwood and the other members of the Senate Finance Committee, we can all be proud parents. With your support, we're writing history with this bill.

I've noticed that some of those who are speaking out the loudest against tax reform don't mention one very significant goal that's achieved in that present bill, and that is simplification. And just to illustrate what we're up against with the present tax code that started out with a 16-word amendment to the Constitution and now has, I think, a line of books 57 feet long that encompass the tax code. Here's just a sample of some of that Internal Revenue Code. The last sentence of section 509A of the code: "For purposes of Paragraph Three, an organization described in Paragraph Two shall be deemed to include an organization described in Section 501C 4, 5, or 6, which would be described in Paragraph Two if it were an organization described in Section 501C 3.'' [Laughter] Now, I think that says it all. [Laughter]

Well, so this is not the moment to bring tax rates down to their lowest level in half a century. I said that wrong. [Laughter] I reversed the sentence. Is this not the moment to bring tax rates down to their lowest level in half a century, to open the doors to opportunity for every American, no matter what their background or color of their skin, and to fire the entrepreneurial engines that will carry America into the 21st century? Yes, the time is now.

And you know, I believe we have the chance to combine progrowth tax reform with spending restraint and a balanced budget. Inflation will become a memory of the distant past, rather than a slumbering beast, always ready to be awakened by overspending. Interest rates can fall further, making that first home no longer a dream but a reality for young couples today. Declining interest rates, low inflation, a healthy, growing economy -- imagine what this means to our nation's retailers, and imagine what it will mean in time to our struggling farmers; to our homeowners and car buyers; or to the millions of American entrepreneurs trying to raise capital to start a new business.

We're seeing no less than a new America -- a rising America, reaching up to our greatest dreams, bound by the values of love for country, family, faith, and freedom that have held us together in good times and bad since our earliest days. You know, as we looked at the second half of this second term, I sometimes think of the quip that Mark Twain is supposed to have made about listening to an opera in German. He said, "You have to wait until the end to hear the verb.'' [Laughter] So it is with this administration. There's a great deal left to be accomplished before the final curtai And when we do reach that curtain, my friends, I'm confident our verb will be "done,'' "well done.''

So, thank you again for your friendship and support. And God bless you all. [Applause] Thank you. Thank you very much. Don't tempt me too far. Remember my previous occupation -- I might try for an encore. [Laughter]

Note: The President spoke at 11:30 a.m. in Room 450 of the Old Executive Office Building.