Seldom have the stakes been higher for America.  What we do and say here will make all the difference to autoworkers in Detroit, lumberjacks in the Northwest, steelworkers in Steubenville who are in the unemployment lines; to black teenagers 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 children.  To understand the state of the Union, we must look not only at where we are and where we’re going but where we’ve been.  The situation at this time last year was truly ominous.

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.

Government’s response to these recessions was to pump up the money supply and increase spending.  In the last 6 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 staggering 21.5 percent.  There were 8 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 nearly in half.  But reduced spending the first and smallest phase of a 3-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, taxes, and interest rates would all be higher.

A year ago, Americans’ faith in their governmental process was steadily declining.  Six out of 10 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 this seemingly endless cycle of high inflation and high unemployment.

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.