—­the era ratification deadline was extended to aid the ratification effort;

—­and minority business procurement by the Federal government has more than doubled;

—­the Nation’s first sectoral policies were put in place, for the auto and steel industries, with my Administration demonstrating the value of cooperation between the government, business and labor;

—­reversing previous trends, real defense spending has increased every year since 1977;

—­the real increase in FY 1980 defense spending is well above 3 percent and I expect FY 1981 defense spending to be even higher;

—­looking ahead, the defense program I am proposing is premised on a real increase in defense spending over the next five years of 20 percent or more;

—­the NATO Alliance has proven its unity in responding to the situations in Eastern Europe and Southwest Asia and in agreeing on the issues to be addressed in the review of the Helsinki Final Act currently underway in Madrid;

—­the peace process in the Middle East established at Camp David and by the Peace Treaty between Egypt and Israel is being buttressed on two fronts:  steady progress in the normalization of Egyptian-Israeli relations in many fields, and the commitment of both Egypt and Israel, with United States’ assistance, to see through to successful conclusion the autonomy negotiations for the West Bank and Gaza;

—­the Panama Canal Treaties have been put into effect, which has helped to improve relations with Latin America;

—­we have continued this Nation’s strong commitment to the pursuit of human rights throughout the world, evenhandedly and objectively;

—­our commitment to a worldwide human rights policy has remained firm;

—­and many other countries have given high priority to it;

—­our resolve to oppose aggression, such as the illegal invasion of the Soviet Union into Afghanistan, has been supported by tough action.

I. ENSURING ECONOMIC STRENGTH ECONOMY

During the last decade our Nation has withstood a series of economic shocks unprecedented in peacetime.  The most dramatic of these has been the explosive increases of OPEC oil prices.  But we have also faced world commodity shortages, natural disasters, agricultural shortages and major challenges to world peace and security.  Our ability to deal with these shocks has been impaired because of a decrease in the growth of productivity and the persistence of underlying inflationary forces built up over the past 15 years.

Nevertheless, the economy has proved to be remarkably resilient.  Real output has grown at an average rate of 3 percent per year since I took office, and employment has grown by 10 percent.  We have added about 8 million productive private sector jobs to the economy.  However, unacceptably high inflation—­the most difficult economic problem I have faced—­persists.