President Reagan last night outlined a domestic policy agenda for his second term that envisions passage of tax simplification this year, a continued military buildup, further restraint in other federal spending and a host of initiatives that Congress spurned in his first term, from enterprise zones to voluntary prayer in schools.
In his nationally televised State of the Union address, Reagan called for full deregulation of natural gas prices, legislation to "protect the unborn," merit pay for teachers, tuition tax credits for parents who send their children to private schools, a permanently manned space station, a subminimum wage for teen-agers, use of the death penalty "where necessary" and a program to allow low-income housing residents to own their dwellings.
The president, who has had a running battle of words with black leaders in recent weeks, said some of his initiatives would help "liberate the spirit of enterprise in the most distressed areas of our country."
"Despite our strides in civil rights, blacks, Hispanics and all minorities will not have full and equal power until they have full economic power," he said.
The president did not offer new proposals in his speech but, for the most part, urged Congress to adopt legislation left over from his first term.
Reagan once again rejected tax increases and endorsed a series of principles for tax simplification, instructing Treasury Secretary James A. Baker III to develop legislation through bipartisan negotiations with Congress.
The basic principles that Reagan endorsed closely parallel those contained in the tax simplification plan proposed last December by the Treasury Department. Reagan avoided giving any new hints about specific provisions he may later support.
The points he endorsed last night include: a top individual rate of no more than 35 percent; elimination of many deductions and tax breaks, but not the mortgage interest deduction; lower corporate rates but continued "incentives for capital formation;" elimination of federal income taxes for those below the poverty line, and an increase in the personal exemption.
Reagan said he hopes for passage of tax simplification "this year," and a senior White House official said the president will send a tax proposal to Congress later this month or in early March.
"The best way" to reduce the $200 billion annual deficits, Reagan said, is "through economic growth."
Reagan, who is asking Congress for at least a 5 percent cut in social programs for the poor in the fiscal 1986 budget he proposed Monday, said "the social safety net for the elderly, needy, disabled and unemployed will be left intact." While the growth of the giant health-care programs, Medicare and Medicaid, will be "slowed," Reagan said, "protections for the elderly and needy will be preserved."
Reagan made clear that he will resist congressional demands for further trims in his Pentagon budget to reduce the deficits. "Spending for defense is investing in things that are priceless: peace and freedom," he said.
The president touched only briefly on the many cuts he asked Congress to approve in politically sensitive spending programs. He called for paring or eliminating government "subsidies," such as those that support Amtrak.
Reagan also acknowledged that many farmers are in "great financial distress" but suggested that continued government aid was not the answer. "We need an orderly transition to a market-oriented farm economy," he said, calling for "fundamental reforms," lower interest rates and "knocking down foreign trade barriers" to U.S. agricultural products.
He also said the administration is "moving ahead" with proposals to "eliminate waste" in government spending. He renewed his call for a constitutional amendment requiring a balanced federal budget and one giving him the power to veto specific items in appropriations bills.
Among programs Reagan offered for minorities and the disadvantaged were his 1982 proposal for 75 urban enterprise zones, in which taxes and regulations would be relaxed to lure job-creating business to blighted urban areas. The legislation was not approved by Congress.
The president also mentioned education and health-care voucher proposals that he made in his first term, and urged Congress to continue supporting the administration's new job-training program.
He again renewed his call for a "youth employment opportunity wage," or a subminimum wage for teen-agers. It would authorize employers to pay workers 19 years old and under a minimum wage of $2.50 an hour between May and September. The idea has been opposed by organized labor, however, and has languished in Congress.
The president also mentioned allowing low-income public housing residents to own and manage their homes. The Department of Housing and Urban Development is beginning a demonstration project in which public housing units are to be offered for sale to residents, but a site has not been selected.
On economic policy, Reagan pledged that "we will continue to cooperate" with the Federal Reserve in seeking a "steady" monetary policy that "ensures price stability without keeping interest rates artificially high or needlessly holding down growth." He did not call for any changes to make Federal Reserve system more beholden to the White House, as some officials had speculated he might.
Reagan vowed that, "consistent with safety standards," the administration will "continue removing restraints on the bus and railroad industries." He said he soon will propose legislation turning Conrail over to the private sector "where it belongs," and "we will support further deregulation of the trucking industry."
However, legislation that would advance trucking deregulation had been put on hold by the White House last year because of opposition from the powerful Teamsters union, which backed Reagan's reelection.
Despite budget cuts elsewhere, Reagan said he will seek "record funding for research and development" in space.
He also said the administration will seek reauthorization and "expanded funding" of the "Superfund" program for hazardous waste cleanup.
Reagan renewed his call for passage of a constitutional amendment allowing voluntary prayer in schools. He asked Congress to pass "legislation to protect the unborn." He also cited the demand for adoptive children among those who cannot have their own, and said, "We have room for these children; we can fill the cradles of those who want a child to love."
The president reiterated his back-to-basics approach to education, stressing the role of "our people, not government." He said "good teachers should be rewarded" through merit pay.
Reagan again asked Congress to approve legislation to tighten the criminal code so that prosecutors could use in court "all reliable evidence that police officers acquire in good faith," and defended use of the death penalty "where necessary."