Tax Reform and Cutbacks to Fuel Growth--Reagan : President Calls for Revolution of Opportunity

President Reagan, sounding a call for “a second American revolution of hope and opportunity,” appealed in his State of the Union address Wednesday night for a historic simplification of the nation’s income tax system, declared that new cutbacks in government would fuel economic growth and defended his “Star Wars” anti-missile program.

Addressing a packed joint session of Congress that interrupted his 36-minute speech with applause 32 times, Reagan made clear that he seeks to curb the federal government’s role in American life permanently--not just for his relatively brief span in the Oval Office.

“Four years ago, we began to change--forever, I hope--our assumptions about government and its place in our lives,” he said. “Out of that change has come great and robust growth--in our confidence, our economy and our role in the world.”

‘Golden Promise’

And he emphasized that he regards the liberation of America’s entrepreneurial spirit as a model for improving the lot of the less fortunate at home and for stimulating prosperity throughout the world. “The time has come to proceed toward a great new challenge--a second American revolution of hope and opportunity,” he said, “ . . . a revolution that carries beyond our shores the golden promise of human freedom in a world at peace.”

High on his priority list was reform of a federal income tax system that he said “remains unfair and limits our potential for growth.” The President, calling the tax simplification blueprint developed at his direction by the Treasury Department the model for his own position, announced that he is instructing his new Treasury secretary, James A. Baker III, to seek a bipartisan compromise with members of Congress already working on tax simplification. But he argued against congressional leaders who have suggested that tax simplification must await agreement on budget reductions:

“Together we can pass, this year, a tax bill for fairness, simplicity and growth, making this economy the engine of our dreams and America the investment capital of the world--so let us begin,” Reagan said.

“One thing that tax reform will not be is a tax increase in disguise,” he vowed, despite previous indications by some Administration officials that they might try to use a tax simplification plan as a revenue raiser that would reduce the federal deficit. The President also said that the maximum rate for individual taxpayers would not exceed 35% in a new system, compared with 50% now.

And he pledged that the mortgage interest deduction for homeowners would be preserved.

Reagan’s advisers originally had planned for him to disclose the details of his tax reform proposal during the State of the Union address. It was during last year’s State of the Union speech that the President had ordered Treasury to develop its plan. But adoption of a specific plan by Reagan himself has been delayed because of a major White House staff shake-up, coupled with long concentration on the $973.7-billion budget package, which the President sent to Congress on Monday.

Unlike Reagan’s previous State of the Union addresses, Wednesday night’s speech offered no significant new proposals and concentrated instead on building the President’s case for the programs that he considers essential for completing his agenda. “We have begun well,” he said, “but it’s only a beginning. We are not here to congratulate ourselves on what we have done, but to challenge ourselves to finish what has not yet been done.”

His 74th Birthday

Reagan’s report to Congress on the State of the Union, fulfilling a duty spelled out by the Constitution, came on his 74th birthday. The oldest President in U.S. history had said earlier that he “treated the day like any other. It makes me feel better that way.”

There was a noticeably warmer feeling between Reagan and his congressional adversaries at this State of the Union address than in previous years. House Speaker Thomas P. (Tip) O’Neill, Jr. (D-Mass.) publicly wished Reagan happy birthday at the start of the nationally televised event and after the President had concluded his address members of Congress sang “Happy Birthday” to him.

The consummate showman, Reagan pulled a surprise by departing from his prepared text at the end of the speech to introduce two special guests whom he described as “real American heroes”--a young Vietnamese woman, Jean Nguyen, who had immigrated to the United States from Saigon 10 years ago and is scheduled to be graduated from West Point in May; and Clara Hale, a 79-year-old black woman from Harlem who runs a home that cares for the children of drug addicts.

Fervent Rhetoric

Defense and foreign policy occupied only about one-fifth of Reagan’s address, but the topics brought forth some of his most fervent rhetoric. “Our mission is to nourish and defend freedom and democracy and to communicate these ideals everywhere we can,” he said. “America’s economic success is freedom’s success. It can be repeated a hundred times in a hundred different nations.”

Reagan staunchly defended his “Star Wars” plan to seek a space-based, non-nuclear defense against enemy missiles, contending: “It is the most hopeful possibility of the nuclear age. But it is not well understood.

“Some say it will bring war to the heavens, but its purpose is to deter war in the heavens and on earth,” the President added. “Some say the research would be expensive. Perhaps, but it could save millions of lives, indeed humanity itself.”

Touching on the impending arms control talks with the Soviet Union in Geneva next month--as Soviet Ambassador Anatoly Dobrynin sat in the balcony of the chamber--the President said: “Our negotiators must be able to go to that table with the united support of the American people. All of us have no greater dream than to see the day when nuclear weapons are banned from this earth.”

Cites Defense Hike

Lobbying for his proposed 5.9% increase in spending by the Pentagon, after accounting for inflation, the President said that “our determination to maintain a strong defense has influenced the Soviet Union to return to the bargaining table.”

Reagan, touching on social issues dearest to his heart, said that, “of all the changes that have swept America the past four years, none brings greater promise than our rediscovery of the values of faith, freedom, family, work and neighborhood.”

He called on Congress “to move this year on legislation to protect the unborn.”

“The question of abortion grips our nation,” he said. “Abortion is either the taking of human life, or it isn’t. And if it is--and medical technology is increasingly showing it is--it must be stopped.”

Reagan also said that “no citizen need tremble, nor the world shudder, if a child stands in a classroom and breathes a prayer.” He asked Congress to “give children back a right they had for a century and a half or more.”