Following is the prepared text of President Carter's State of the Union address, delivered last night to a joint session of Congress:

Mr. President, Mr. Speaker, members of the 95the Congress, ladies and gentlemen:

One year ago tomorrow, I walked from here to the White House to take up the duties of President of the United States. I return tonight to fulfill one of those duties: to "give to the Congress" - and the nation - "information on the state of the Union."

Militarily politically, economically, and in spirit, the state of our Union is sound.

We are a great country, a strong country, a vital and dynamic country - and so we will remain.

I want to speak to you tonight about where we are, and where we must do go - what we have done, and what we must do - and I want to pledge my best efforts, and and to ask you to pledge yours.

Each generation of Americans has to face circumstances not of its own choosing, by which its character is measured and its spirit is tested.

There are times of emergency, when a nation and its leaders must bring their energies to bear on a single urgent task.

That was the duty Abraham Lincoln faced when our land was torn apart by conflict.That was the duty faced twice by Franklin Roosevelt: when he led America out of economic depression, and again when he led America to victory in war.

There are other times when there is no single overwhelming crisis - yet profound national interests are at stake.

At such times the risk of inaction can be equally great. It becomes the task of leaders to call forth the vast and restless energies of our people to build for the future.

That is what Harry Truman did in the years after the Second World War, when we helped Europe and Japan rebuild themselves and secured an international order that has protected freedom from aggression.

We live in such times now - and face such duties.

We have come through a long period of turmoil and doubt, but we have once again found our moral course and with a new spirit we are striving to express our best instincts to the rest of the world.

There is all across our land a growing sense of peace and common purpose. This sense of unity cannot be expressed in programs, legislation, or dollars. It is an achievement that belongs to every individual American. This untiy towers over all our efforts here in Washington, and serves as an inspiring beacon for all of us elected to serve. New Spirit Demanded

This new atmosphere demands a new spirit - a partnership between those who lead and those who elect. The foundation of this partnership is truth, the courage to face hard decisions, concern for one another and the common good over special interest, and a basic faith and trust in the wisdom and strength of the American people.

For the first time in a generation, we are not haunted by a major international crisis or by domestic turmoil, and we now have a rare and proceless opportunity to address the persistent problems which burden us as a nation and which became quietly and steadily worse over the years.

As President I have had to ask you - the members of Congress, and the American people - to come to grips with some of the hardest questions facing our society.

We must make a maximum effort - because if we do not aim for the best, we are likely to achieve very little.

I see no benefit to the country if we delay, because the problems will only grow worse.

We need patience and good will, and we need to realize that there is a limit to the role and function of government. Government cannot solve all our problems , set all our goals, or define our vision. Government cannot eliminate poverty, provide a bountiful economy, reduce inflation, save our cities, cure illiteracy, provide energy, or mandate goodness! Only a true partnership between government and the people can hope to reach these goals.

Those who govern can sometimes inspire, and we can identify needs and marshal resources, but we cannot be the managers of everything and everybody.

We must move away from crisis management and establish clear goals for the future which will let us work together and not in conflict. Never again should we neglect a growing crisis like the shortage of energy, where further delay will only lead to more harsh and painful solutions.

Every day we spend more than $120 million for foreign oil. This slows our economic growth, lowers the value of the dollar overseas, and agravetes unemployment and inflation at home.

We know we have to act. We know what we must do: increase energy production, cut down on waste, and use more of those fuels which are plentiful and more permanent. We must be fair to people, and not disrupt our nation's economy and the budget.

It sounds simple, but I recognize the difficulties involved. I know it is not easy for the Congress to act. But the fact remains that on energy legislation we have failed the American people. Almost five years after, the oil embargo dramatized the problem, we still fo not have a national energy program. Not much longer can we tolerate this statement. It undermines our national interest both at home and abroad. We must succeed, and I beleive we will.

Our main task at home this year, with energy a central element, is the nation's economy. We must continue the recovery and further cut unemployment and inflation.

Last year was a good one for the United States. We reached our major economic goals for 1977. Four million new jobs were created - on all-time record - and the number of unemployed dropped by more then a million. Unemployment is at its lowest level since 1974, and not since World War II has such a high percentage of our people been employed.

The rate of inflation went down. There was good growth in business profits and investments - the source of more jobs for our workers - and a higher standard of living for all our people. After taxes and inflation, there was a healthy increase in workers' wages. 2 Trillion Economy

This year, our country will have the first $2 trillion economy in the history of the world.

We are proud of the progress this first year, but we must do even better.

We still have serious problems on which all of us must work together. Out trade deficit is too large, inflation is still too high, and too many Americans still do not have a joB.

I have no simple answeres for these problems. But we have developed an economic policy that is working, because it is sensible, balanced, and fair. It is based on four principles:

First, the economy must keep on expanding to produce the new jobs and income our people need. The fruits of growth must be widely shared. More jobes must be made available for those who have been by-passed until now, and the tax system must be made fairer and simpler.

Second, private business, not the government, must lead the espansion.

Third, we must lower the rate of inflation and keep it down. Inflation slows down economis growth, and it is most cruel to the poor and to the elderly and others who live on fixed incomes.

Fourth, must contribute to the strength of the world economy.

I will announce proposals for improving our tax system later this week. We can make our tax laws fairer; we can make them simpler and easier to understand; and at the same time we can - and we will - reduce the tax burden on American citizens by $25 billion.

The tax reforms and tax reductions go together. Only with the long over-due reforms will the full tax cut be advisable.

Almost $17 billion in income tax cuts will go to inviduals. Ninety-six per cent of American taxpayers will see their taxes go down. For a typical family of four this will mean an annual saving of more than $250 - a tax reduction of about 20 per cent. A further cut of $2 bilion in excise taxes will give more relief and directly reduce the rate of inflation.

We will also provide strong additional incentives for business investment through substantial cuts in corporate tax rates and improvements in the investments tax xredit.

Our tax proposals will increase opportunity every where in this nation, but additional jobs for the disadvantaged desereve special attention.

We have already passed laws to assure equal access to the voting booth, to schools, to housing, and to jobs. But job opportunity - the chance to earn a decent living - is also a basic human right which we cannot and will not ignore.

A major priority for our nation is the final elimination of barriers that restirict the opportunities available to women, and to black people, Hispanics, and other minorities. We have come a long way toward that goal, but there is still much to do. What we inherited from the past must not be permitted to shackle us in the future.

I am asking for a substantial increase in funds for public jobs for our young people, and I am also recommending that the Congress continue the public service employment programs at more than twice the level of a year ago. When welfare reform is completed, we will have more than a million additional jobs so that those on welfare who are able to work can work.

Howere, we know that in our free economy, private business is still the best source of new jobs. Therefore, I also propose a new program to encourage businesses to hire young and disadvantage Americans. These young people only need skills - and a chance - in order to take their place in our economic system. Let's give them the chance they need. A major step forward will be early passage of the greatly improved Humphrey-Hawkins bill.

My budget for 1979 addresses our national needs, but it is lean and tight. I have cut waste wherever possible.

I am proposing and increase of less than 2 per cent after adjusting for inflation - the smallest increase in the federal budget in four years.

Lately, federal spending has taken a steadily increasing portion of what Americans produce. Our new budget reverses that trend, and later I hope to bring the government's toll down even further.

In the time of high employment and a strong economy, deficit spending should not be a feature of our budget. As the economy continues to gain strength and our employment rates continue to fall, revenues will grow. With careful planning, efficient management, and proper restraint on spending, we can move rapidly toward a balenced budget - and we will.

Next year the budget deficit will be only slightly less than this fiscal year - but one-third of the deficit is due to the necessary tax cuts I have proposed. Attack on Inflation

The third element in our program is a renewed attack on inflation. We have learned the hard way that high unemployment will not prevent or cure inflation.

Government can help by stimulating private investment and by maintaining a responsible economic policy. Through a new top-level review process, we will do a better job of reducting government regulation that drives up costs and prices.

But, again, government alone cannot bring down the rate of inflation. When a level of high inflation is expected to continue, companies raise prices to protect their profit margins against prospective increases in wages and other costs, while workers demand higher wages as protection against expected price increases. It's like escalation in the arms race and, understandably, no one wants to disarm alone.

No one firm or group of workers can halt this process. It is an effort we must all make together. I am therefore asking government, business, labor, and other groups to join in a voluntary program to moderate inflation by holding wage and price increases in each sector of the economy during 1978 below the average increases of the last two years.

I do not beleive in wage and price controls. A sincere commitment to voluntary constraint provides a way - perhaps the only way - to fight inflation without government interference.

Economic success at home is also the key to sucess in our international economic policy. An effective energy program, strong investment and producticity, and controlled inflation will improve our trade balance and help to protect the integrity of the dollar overseas.

By working closely with our friends abroad we can promote the economic health of the world with fair and balanced agreements lowering barriers to trade.

Despite the inevitable pressures which develop when the world economy suffers from high unemployment, we must firmly resist the demands for self-defeating protectionism. But free trade must also be fair trade. I am determined to protect American industry and workers against unair or illegal foreign trade practices.

In a separate written message to Congress I have outlined other domestic initiatives, such as welfare reform, consumer protection, basic eduction skills, urban policy, reform of our labor laws, and national health care. I will not repeat those here tonight, but there are several points I would like to make directly to you.

During these past years Americans have seen our government grows far from us.

For some citizens it has become almost like a foreign country, so stange and distant that often we have to deal with it through trained ambassadors who have sometimes become too powerful and influential - lawyers, accountants, and lobbyists. This cannot go on.

We must have what Abraham Lincoln sought - a government for the people.

We have made progress toward that kind of government. You have given me the authority I requested to reorganize the federal bureaucracy, and I am using it.

We have already begun a series of reorganization plans which will be completed over a period of three years.

We have also proposed abolishing almost 500 federal advisory commissions and boards.

But I know that our people are still sick and tired of federal paperwork and red tape. Bit by bit we are chopping down the thickest of unnecessary federal regulations by which government too often interferes in our personal lives and business. We have cut the public's federal paperwork load by 12 per cent in less than a year. And we are not through cutting.

We have made a good start on turning the gobbledygook of federal regulations into plain English that people can understand, but we still have a long way to go.

We have brought together parts of 11 government agencies to creat the new Department of Energy - and now it is time to take another major step by creating a separate Department of Education.

But even the best-organized govenment will only be as effective as the people who carry out its policies. Civil Service Reform

For this reason, I consider civil service reform to be absolutely vital. Worked our with the civil servants themselves, this reorganization plan will restore the merit principle to a system which has grown into a bureaucratic maze. It will provide greater management flexibility and better rewards for better performance without compromising job security.

Then and only then can we have a government that is efficient, open, and truly worthy of our people's understanding and respect. I have promised we will have such a government. I intend to keep that promise.

In our foreign policy, the separation of our people from government has been a source of weakness and error. In a democratic system like ours, foreign policy decisions must be able to stand the test of public examination and debate. If we make a mistake in this administration, it will be on the side of frankness and opennes with the American people.

In our modern world, when the deaths of millions can result from a fes terrifying seconds of destruction, the path to national strength and security is identical with the path to peace.

Tonight I am happy to report that because we are strong our nation is at peace with the world.

We are a confident nation. Ww have restored a moral basis for our foreign policy. The very heart of our identity as a nation is our firm commitment to human rights.

We stand for human rights because we believe that the purpose of government is to promote the well-being of its citizens. This is true in our domestic and in our foreign policy. The world must know that in support of human rights the United States will stand firm.

We expect no quick or easy results, but there has been significant movement toward greater freedom and humanity in several parts of the world.

Thousands of political prisoners have been freed. The leaders of the world - even our ideological adversaries - now see that their attitude toward fundamental human rights affects their community and their relations with the United States.

To serve the interests of every American, our foreign policy has three major goals.

Our first and prime concern is and will remain the security of our country.

Security is based on our national will and on the strength of our armed forces. We have the will, and militarily we are very strong.

Security also comes throgh the strength of our alliances. We have reaffirmed our commitment to the defense of Europe, and this year we will domonstrate that commitment by further modernizing and strengthening our military capabilities there.

Security can also be enchanced by agreements will potential adversaries which reduced the threat of nuclear disaster while maintaining our own relative strategic capability.

In areas of peaceful competition with the Soviet Union we will continue to more than hold our own.

At the same time we are negotiating with quiet confidence, without haste, with careful determination, to ease the tensions between us and to ensure greater stability and security.

The strategic arms limitation talks have been difficult and prolonged. We want a mutual limit on both nations - and then actual reductions in strategic arms as a major step toward ultimate elimination of nuclear weapons from the face of the earth.

If the talks result in an agreement this year - and I trust they will - I pledge to you that the agreement will maintain and enchance the stability of the world's strategic balance and the security of United States.

For 30 years, concerted but unsuccessful efforts have been made to ban the testing of atomic explosives - both military weapons and peaceful nuclear devices.

We are hard to work with Great Britain and the Soviet Union on an agreement which will stop testing, and will protect our national security and provide for adequate verification of compliance. Progress Toward Ban

We are now making progress toward this comprehensive ban on nuclear explosions.

We are also working vigorously to halt the proliferation of nuclear weapons among the nationals of the world, and to reduce the deadly global traffic in conventional arms sales.Our stand for peace is suspect we were also the principal arms merchant of the world. So we have decided to cut down our arms transfers abroad, on a year-by-year basis, and to work with other major arms exporters to encourage their similar restraint.

Every American has a stake in our second major goal - a world at peace. In a nuclear age, each of us is threatened when peace is not secured.

We are trying to promeot harmony in those part of the world where major differences among other nations threaten international peace.

In the Middle East we are contributing our good offices to maintain the momentum of the current negotiations - and to keep open the lines of communication among the Middle East leaders. The whole world has a great stake in the success of these efforts. This is a precious oppoetunity for the historic settlement of long-standing conflict - an opportunity which may not come again in out life-time.

Our role has been difficult and sometimes thankless and conversial, but it has been constructive and necessary - and it will continue.

Our third major foreign policy goal is ont that touches the life of every American citizen, every day: world economic growth and stability.

This requires strong economic performance by the industrilized democracies and progress in resolving the global energy crisis. Last fall, with the help of others, we succeeded in our vigorous efforts to maintain stability in the price of oil. But as many foreign leaders have emphasized the greatest future contribution America can make to the world economy would be an effective energy conservation program here at home. We will hesitate to take the actions needed to protect the integrity of the dollar.

We are trying to develop a more just international system. In this for human development in Asia, Af-spirit, we are supporting the strugle rica, and Latin America.

Finally the world is watching to see how we act on one of our most important items of business: approval of the Panama Canal treaties. The treaties now before the Senate are the result of the work of four administrations - two democratic and two Republican. They guarantee taht the canal will be open always for unrestricted use by the ships of the world. Our ships have the right to go to the head of the line for priority of passage in times of need or emergency. We retain the own military forces if necessary to guarantee its openness and neutrality.

The treaties are to the clear advantage of ourselves, the Panamanians, and the other users of the canal. Ratifying the Panam Canal traties will demonstrate our good faith to the world, discourage the spread of hostile ideologies in this hemisphere, and directly contibut to the economic well-being and security of the United States.

There were two moments on mu recent journey which, for me, confirmed what the final aims of our foreign policy must always be. One was in a village in India, where I met people as passionately attached to their rights and libeties s we are - but whose children have a far smaller chance fof good health, education, and human fulfilment than a child born in this country.

The other was in Warsaw, capital of a nation twice devastated by war in this century. There, people have rebuilt the city which war's destruction took from them; but what was new only emphasized how much had been lost.

What I saw in those two places crystallized the purposes of our own country's policy: to ensure economic justice, ot advance human rights, to resolve conflicts without violence, and to proclaim our constant faith in the liberty and dignity of human beings everywhere. Much Work to Be Done

We Americans have a great deal of work to do together.

In the end, how well we do that work will depend on the spirit in which we approach it.

We must seek fresh answers, unhindered by the state prescriptions of the past.

It has been said that our best years are behind us, but I saw again taht America's best is still ahead. We have emerged from bitter experienceds chastened but proud, confident once again, ready to face challanges once again, united once again.

We come together tonight at a solemn time. Last week the Senate lost a good and honest man, Lee Metcalf of Montana.

Today the flag of the United States flew at half-mast from this Capitol and from American installations and ships all over the world, in mourning for Sen. Huberty Hunphery.

Because he exemplified so well the joy and zest of living, his death reminds us of the possibilities offered to us by life. He always looked to the future with a special American kind of confidence, of hope and ethusiasm. The best way we can honor him is by following his example.

Our task, in the words of Sen Humphrey, is "reconciliation, rebuilding, and rebirth."

Reconciliation of private needs and interests into a higher purpose.

Rebuilding the old dreams of justice and liberty, of country and community.

Rebirth of our faith in the common good.

Each of us here tonight - and all who are listening in your homes - must rededicate ourselves to serving the Common good. We are a communtiy, a beloved community, all of us; our fates are linked; our futures intertwined: and if we act in that knowledge and with that spirit together we can move mountains.