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National Life Advertisers Association, Washington, DC, September 26, 1973
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National Life Advertisers Association, Washington, DC, September 26, 1973
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The original documents are located in Box D35, folder "National Life Advertisers
Association, Washington, DC, September 26, 1973" of the Ford Congressional Papers:
Press Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box D35 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
NATIONAL LIFE ADVERTISERS ASSOCIATION AT
10:30 A.M. WEDNESDAY, SEPTEMBER 26, 1973,
IN THE REGENCY BALLROOM OF THE SHOREHAM
AMERICANA HOTEL, WASHINGTON, D.C.
1) VPs decision
NOT
Reguts -
r) why - teachs
3) Whene
IT IS DIFFICULT TO PERCEIVE IT the
AMIDST ALL THE MOANING AND THE GROANING
BUT WE ARE RIDING THE CREST OF AN ECONOMIC
BOOM.
THERE IS MOANING AND GROANING
FOR A NUMBER OF REASONS -- ONE BEING THAT
has been
THE STOCK MARKET IS BEING CLAWED AND
went for the last 5 days.
PAWED BY THE BEARS. BUT THE CHIEF REASON
IS INFLATION.
OF ALL THE PROBLEMS THE UNITED
STATES HAS BEEN FACED WITH OVER THE LAST
DECADE OR so, THE ONE THAT HAS BEEN THE
MOST PERSISTENT, THE MOST PERVASIVE AND
FORD LIBRARY
THE MOST PERVERSE HAS BEEN INFLATION.
It mustures your understry, 210 million americans, 4 which people
world. will.
-2-
THE CONTROL OF INFLATION UNDER
CONDITIONS OF PROSPERITY IN PEACETIME IS
THE DOMINANT DOMESTIC CHALLENGE OF THE
SEVENTIES AS THE UNITED STATES STRUGGLES
WITH THE PROBLEM OF REBUILDING ITS
COMPETITIVE POSITION IN WORLD MARKETS.
YOU KNOW THAT INFLATION IMPOSES
AN UNJUST BURDEN ON EVERYONE BUT THAT
RETIRED AMERICANS AND PERSONS ON FIXED
INCOME SUFFER THE MOST. IN RECENT MONTHS,
GALLOPING FOOD PRICE INFLATION HAS BROUGHT
CRIES OF ANGUISH FROM ALL OF US. IN THE
FINAL ANALYSIS, INFLATION IS JUST PLAIN
CONFISCATION OF INCOME FOR EVERYONE.
FURTHERMORE, THE RISING COSTS OF DOING
BUSINESS THREATEN JOBS. THIS MEANS THAT
THE ECONOMIC STRENGTH OF THE NATION AT
HOME AND IN WORLD MARKETS IS CLEARLY
THREATENED.
-3-
IT IS AGAINST THIS BACKDROP
THAT I TALK WITH YOU TODAY ABOUT GENERAL
ECONOMIC CONDITIONS IN THE UNITED
STATES -- AND THE CONTINUING CHALLENGE
THAT FACES US.
WE HAVE ALL BECOME
ECONOMY-WATCHERS IN THE SEVENTIES, AND
OUR EXPERIENCE IN THAT REGARD IS MUCH LIKE
PARENTS WHOSE CHILD IS SLOW IN LEARNING
TO TALK. WHEN THE CHILD FINALLY DOES TALK,
THE FLOOD OF WORDS IS A BIT TOO MUCH FOR
US.
SO IT HAS BEEN WITH THE ECONOMY.
WE WERE IMPATIENT THROUGHOUT 1970 AND
1971 -- AND ON INTO THE SPRING OF 1972 --
AS THE BUSINESS RECOVERY APPEARED SLUGGISH.
THEN BUSINESS ACTIVITY SPURTED AND IN
RECENT MONTHS A VERY DIFFERENT PROBLEM
GERALD R.FORD LIBRARY
-4-
HAS EMERGED -- A RAPID ACCELERATION OF
GENERAL PRICE INFLATION, premarly in food y petrolem
IN THE FIRST QUARTER OF 1972,
OUR UNUSED RESOURCES SEEMED ADEQUATE TO
ACCOMMODATE A LONG AND SIZABLE UPTREND IN
SALES AND OUTPUT. THE NATIONAL
UNEMPLOYMENT RATE REMAINED STUCK AT
NEARLY 6 PER CENT. ONLY 75 PER CENT OF
THE NATION'S MANUFACTURING FACILITIES WERE
IN USE. PRICE AND WAGE CONTROLS, AIDED
BY COMPETITIVE FORCES, APPEARED TO HAVE
DAMPENED THE WAGE-PRICE SPIRAL.
BEGINNING WITH THE SECOND
QUARTER OF 1972, THE UPTREND IN SALES AND
OUTPUT GAINED SPEED. SINCE THEN,
VIRTUALLY ALL SECTORS OF THE ECONOMY
HAVE SHOWN SIGNIFICANT GAINS.
LIBRARY
-4-
HAS EMERGED -- A RAPID ACCELERATION OF
GENERAL PRICE INFLATION, primary in food Y petrolem
IN THE FIRST QUARTER OF 1972,
OUR UNUSED RESOURCES SEEMED ADEQUATE TO
ACCOMMODATE A LONG AND SIZABLE UPTREND IN
SALES AND OUTPUT. THE NATIONAL
UNEMPLOYMENT RATE REMAINED STUCK AT
NEARLY 6 PER CENT. ONLY 75 PER CENT OF
THE NATION'S MANUFACTURING FACILITIES WERE
IN USE. PRICE AND WAGE CONTROLS, AIDED
BY COMPETITIVE FORCES, APPEARED TO HAVE
DAMPENED THE WAGE-PRICE SPIRAL.
BEGINNING WITH THE SECOND
QUARTER OF 1972, THE UPTREND IN SALES AND
OUTPUT GAINED SPEED. SINCE THEN,
VIRTUALLY ALL SECTORS OF THE ECONOMY
HAVE SHOWN SIGNIFICANT GAINS.
LIBRARY
-5-
NOW THE UNITED STATES ECONOMY
IS RIDING A BOOM. OUR GROSS NATIONAL
PRODUCT IS RUNNING AT A RATE OF
$1,272 BILLION. THERE ARE 3 MILLION MORE
PEOPLE WORKING TODAY THAN A YEAR AGO.
UNEMPLOYMENT IS AT A RATE OF 4.8 PER CENT
DOWN SHARPLY FROM THE 6 PER CENT FIGURE
WHERE THE NEEDLE WAS STUCK FOR SO LONG.
THERE ARE 84.4 MILLION JOBS AN ALL-TIME
RECORD AND WAGES ARE ALSO AT AN ALL-TIME
HIGH. THERE WERE 1.6 MILLION NEW JOBS
CREATED IN THE FIRST SIX MONTHS OF 1973
ALONE.
IN 1970, WITH A POPULATION OF
204,879,000, WE HAD 79,627,000 PEOPLE
EMPLOYED. SINCE THEN, OUR POPULATION IS
UP 2.4 PER CENT TO 209,866,000, BUT THE
LIBRARY
NUMBER OF JOBS HAS GROWN NEARLY 6 MILLION,
-6-
AN INCREASE OF MORE THAN 7 PER CENT --
TWICE AS MUCH AS THE GROWTH IN POPULATION.
DURING THIS SAME PERIOD,
PERSONAL INCOME ROSE FROM $542 BILLION
TO $681 BILLION, A JUMP OF 25 PER CENT.
SALES OF NON-DURABLE GOODS INCREASED
24 PER CENT; DURABLE GOODS, 52 PER CENT.
AT THE SAME TIME, PRICES WENT UP
13 PER CENT. SO IT'S CLEAR THAT REAL
BUYING POWER KEPT STEADILY AHEAD OF
INFLATION.
NOW WE MUST FIGHT TO PRESERVE
THIS EDGE, AND THAT IS THE JOB OF THE
ADMINISTRATION, THE CONGRESS AND THE
AMERICAN PEOPLE. IT IS THE PEOPLE, MOVING
IN RESPONSE TO SUPPLY AND DEMAND, WHO ARE
THE ULTIMATE DECISION MAKERS ON INFLATION.
GOOD, GOOD SOUND FEDERAL POLICIES CAN HELP DO
THE JOB.
-7-
INFLATION IS OUR NO. 1
POLITICAL ISSUE. THERE ARE THOSE WHO ARE
SEEKING TO MAKE POLITICAL HAY OUT OF THAT
ISSUE. AND THE IRONIC FACT IS THAT THEY
ARE THE SAME PEOPLE WHO TOUCHED OFF THE
INFLATIONARY PRESSURES HAUNTING US TODAY
at the outrit Arm
BY INSISTING IN THE MID-SIXTIES THAT WE
Vertuar
COULD FIGHT A COSTLY WAR HALFWAY ACROSS
THE WORLD WITHOUT A TAX INCREASE -- THE
PEOPLE WHO INSISTED WE COULD HAVE BOTH
GUNS AND BUTTER. THESE ARE THE SAME
PEOPLE WHO ARE TODAY VOTING FOR
BUDGET-BUSTING PROGRAMS AND THUS ARE
ADDING TO OUR INFLATIONARY WOES.
I SAY IT IS THE ULTIMATE IN
IRRESPONSIBILITY TO ATTACK THE
ADMINISTRATION ON THE INFLATION ISSUE
GREATO R.FORD LIBRARY
-8-
AND AT THE SAME TIME VOTE FOR
BUDGET-BUSTING HARA DEFICIT SPENDING.
AND YET MANY MEMBERS OF CONGRESS HAVE
BEEN GETTING AWAY WITH SUCH TACTICS FOR
YEARS.
THERE IS NO HIGHER NATIONAL
PRIORITY TODAY THAN TO BALANCE THE FEDERAL
BUDGET AS A MEANS OF FIGHTING INFLATION.
DEFICIT FEDERAL SPENDING ROBS THE FAMILY
BUDGET OF PURCHASING POWER BY BIDDING
PRICES UP, UP AND RESULTS IN MORE WASTED TAX
DOLLARS IN THE FORM OF INTEREST PAYMENTS
ON THE NATIONAL DEBT.
WE ARE FIGHTING INFLATION ON
FOUR FRONTS. WE ARE SEEKING TO BALANCE
THE BUDGET. WE HAVE ADOPTED A STIFF NEW
SET OF PRICE CONTROLS. THE FEDERAL
RESERVE BOARD IS KEEPING A TIGHT REIN ON
-9-
THE MONEY SUPPLY. AND THE ADMINISTRATION
AND THE CONGRESS HAVE ACTED TO ENCOURAGE
GREATLY EXPANDED PRODUCTION OF FOOD
SUPPLIES, WITH THE HOPE NOT ONLY OF
HALTING THE RISE IN FOOD PRICES BUT
no more soil bank 100
EVENTUALLY LOWERING THEM.
more arrage set-asides.
THE MOST IMPORTANT ACTION THE
CONGRESS CAN TAKE NOW TO COPE WITH
INFLATION IS TO DEAL RESPONSIBLY WITH THE
FISCAL 1974 FEDERAL BUDGET.
DURING FISCAL 1973, THE LEVEL
OF FEDERAL SPENDING WAS HELD TO
$247 BILLION, LARGELY DUE TO THE PRESIDENT'S
COURAGEOUS REFUSAL TO SPEND BILLIONS OF
DOLLARS APPROPRIATED BY THE CONGRESS.
DURING THE FIRST SIX MONTHS OF THIS
CALENDAR YEAR, INCOME WAS PRACTICALLY
MATCHING FEDERAL EXPENDITURES.
GERALD LIBRARY R.FORD
-10-
IN FISCAL 1974 THE PRESIDENT
HAS ANNOUNCED THAT SPENDING SHOULD BE
HELD TO THE $269 BILLION LEVEL. IF CONGRESS
WILL COOPERATE WE CAN HAVE A BALANCED BUDGET
THIS FISCAL YEAR. AND A BUDGET THAT IS
BALANCED WILL HELP BLUNT THE EDGE OF
INFLATION. 2 request to report - Congress has added about 845
81,6 Whin m appropriations and Presidents budget 4 potentially, by ALL actumo, 5 Lathan.
THE ECONOMY IS COOLING OFF AND
YET PRICE INFLATION REMAINS ACUTE.
BECAUSE INFLATIONARY PRESSURES ARE STILL
STRONG AND THERE IS DANGER OF A CREDIT
Jack
CRUNCH
THERE IS TALK OF A TAX INCREASE.
Schulty.
THE PROBLEM IS HOW TO CONTINUE
TO FIGHT INFLATION WITHOUT SQUEEZING SO
HARD THAT THE SLOWDOWN TURNS INTO A
FULL-FLEDGED RECESSION.
I AM OPPOSED TO AN INCREASE
LIBRARY
-11-
IN INCOME TAXES, EVEN IN THE FORM OF A
10 PER CENT SURCHARGE THAT WOULD BE
REFUNDABLE AT A LATER DATE. 2 am also complant
the President is appoint to such a that increase.
I AM OPPOSED TO A TAX INCREASE
AT THIS TIME BECAUSE I THINK WITHOUT IT
WE CAN MAKE A SOFT LANDING, AS THE
ECONOMY COOLS OFF IN THE MONTHS AHEAD.
+ THINK WE WOULD LAND WITH A THUMP IF THE
PROPOSED SURCHARGE WERE TO BE IMPOSED.
IRS
temperator mestrained
THE SLOWDOWN IN ECONOMIC GROWTH
IS UNDENIABLE, AND IT IS HAPPENING
WITHOUT AN INCREASE IN TAXES.
IN THE SECOND QUARTER OF 1973,
THE U.S. ECONOMY GREW LESS THAN ONE-THIRD
AS FAST AS IN THE PREVIOUS TWO QUARTERS.
INDUSTRIAL PRODUCTION VIRTUALLY LEVELLED
OFF RECENTLY, AS DID RETAIL SALES.
FORD LIBRARY
-12-
There trends do not
I DON'T THINK THIS MEANS THAT
RECESSION LIES AHEAD. THIS SLOWER GROWTH
DOES NOT REFLECT ANY WIDESPREAD WEAKNESS
IN BUSINESS. ON THE CONTRARY, THE ECONOMY
IS GROWING LESS RAPIDLY PRIMARILY BECAUSE
FAST GROWTH IS NO LONGER POSSIBLE IN MANY
INDUSTRIES. THERE ARE NO LONGER ENOUGH
UNDERUTILIZED MACHINES, ENOUGH SKILLED
WORKERS OR ENOUGH BASIC MATERIALS TO
SUPPORT THE KIND OF PRODUCTION GAINS THAT
WERE MADE EARLIER IN THIS PERIOD OF
EXPANSION.
THE UNDERLYING FORCES OF
EXPANSION ARE STILL DOMINANT, ALONG WITH
ACCOMPANYING INFLATIONARY PRESSURES.
YET THE ECONOMY IS UNMISTAKABLY
COOLING OFF, AND SIGNS OF SLOWER GROWTH
WILL INCREASE OVER THE NEXT FEW MONTHS.
-13-
THIS MEANS THAT THE MONTHS AHEAD WILL BE
A MOST DIFFICULT PERIOD FOR THOSE CHARGED
WITH DETERMINING U.S. ECONOMIC POLICY.
WE MUST NOT YIELD TO THE TEMPTATION TO
EASE UP IN OUR FIGHT AGAINST INFLATION.
WE MUST NOT PREMATURELY INSTITUTE POLICIES
OF FISCAL OR MONETARY EASE. THIS WOULD
SURELY SERVE TO PERPETUATE INFLATION.
I THINK THE COURSE OF WISDOM IS
ONE OF CONTINUED RESTRAINT.
AT THE SAME TIME, I BELIEVE THERE
IS CAUSE FOR SOME OPTIMISM. REASON TO
BELIEVE WE ARE MAKING PROGRESS IN DEALING
WITH OUR NO. 1 DOMESTIC PROBLEM --
INFLATION.
GLANTO R.FORD LIBRARY
THE WORST IS BEHIND US IN TERMS
OF FOOD PRICE INFLATION. RECORD WHEAT,
The new from will, with emplusion on
production, will help.
-14-
CORN AND SOYBEAN CROPS ARE IN PROSPECT.
AND ALTHOUGH THIS DEVELOPMENT WILL BE
OFFSET BY CONTINUING STRONG OVERSEAS DEMAND,
THE EFFECT ON DOMESTIC PRICES SHOULD BE
SALUTARY.
I PREDICT THAT THE PRICES OF
GOODS, GENERALLY, WILL COME DOWN IN THE
SECOND HALF OF 1974.
THE BEST WAY TO CONTROL
INFLATION IS TO EXPAND PRODUCTION. AND IN
THAT RESPECT WE ARE AT A CROSSROADS IN
THE EFFORT TO CONTAIN INFLATION.
WE MUST AIM AT A CLOSER BALANCE
BETWEEN GAINS IN NATIONAL WAGE AND BENEFIT
INCREASES AND GAINS IN NATIONAL
PRODUCTIVITY.
A CLOSER BALANCE BETWEEN
COMPENSATION AND PRODUCTIVITY
-15-
DOES NOT IMPLY SLOWER GROWTH IN LIVING
STANDARDS. RATHER, IT PROMISES MORE RAPID
ECONOMIC GROWTH, LARGER INCREASES IN
EMPLOYMENT AND INCOME, A MORE PROFITABLE
BUSINESS SECTOR, HIGHER CAPITAL INVESTMENT
AND A DIMINISHED EROSION IN REAL INCOMES.
CLEARLY, THIS WOULD COMBINE THE
BEST OF ALL WORLDS -- AND IT IS THE GOAL
ON WHICH WE MUST SET OUR SIGHTS.
In the meantine The Compress of The Present
must cooperate by paing END needed -- Ligalation
Energy Trade - emphasis almhar on conservation Papoline but
de-regulation of will heal priors
for gas.
research
TORD
M OFFICE COPY
Rexmarks by Rep. Gerald R. Ford before the National Life Advertisers Association at
10:30 a.m. Wednesday, Sept. 26, 1973, in the Regency Balllroom of the Shoreham
Americana Hotel, Washington, D.C.
It is difficult to perceive it amidst all the moaning and the groaning but we
are riding the crest of an economic boom.
There is moaning and groaning for a number of reasons--one being that the stock
pawed
market tm is being clawed and by the bears. But the chief reason is inflation.
Of all the problems the United States has been faced with over the last decade or
so, the one that hæ been the most persistent, the most pervasive and the most
perverse has been inflation.
The control of inflation under conditions of prosperity
in peacetime is the
dominant domestic challenge of the Seventies as the United State S struggle S with the
problem of rebuilding its competitive position in world markets.
americans
You know that inflation imposes an unjust burden on everyone but that
retired
and persons on fixed income suffer the most. In recent months, galloping food price
inflation has brought cries of anguish from all of USE. In the final analysis,
inflation is just plain confiscation of income for everyone. Furthermore, the rising
costs of doing bu sine SS threaten jobs. This means that the economic strength of the
nation at home and in world markets is clearly threatened.
It is against this backgrop that I talk with you today about general ecomomic
conditions in the United States--and the continuing challenge that faces us.
in the Seventies,
We have all become economy-watchers and our experience in that regard is
much like parents whose child is slow in learning to talk. When the child finally
doest t ak, the flood of words is manizine a bit too much for us.
So it has been with the economy. We were impatient throughout 1970 and 1971--and
on into the spring of 1972--as the
busine BE recovery
appeared
sluggish. Then business activity spurted, and in recent months a very different problem
has emerged--a rapid acceleration of general price inflation.
In the first quarter of 1972, our unused re sources seemed adequate to
accommodate a long and sizable uptrend in sales and output. The national unemployment
rate
remained stuck at nearly 6 per cent. Only 75 per cent of the nation's manufacturing
facilities were in use. Price and wage controls, aided by competitive forces, appeared
to have dampened the wage-price spiral.
Beginning with the second quarter of 1972, the uptrend in sales and output gained
speed. Since then, virioually all sectors of the economy have shown significant g ains.
Now the United Statemeconomy is riding a boom. Our gross national product is
LIBRARY
running at a rate of $1,272 billion. There are 3 million more people working today th a n
a year ago. UnempToyment is at a rate of 4.8 per cent, down sharply from the 6 per cent
figure where the needle was stuck for SO long. There are 84.4 million jobs, an all-time
-2-
record, and wages are also at an all-time high. There were 1.6 million new jobs created
in the first six months of 1973, alone.
In
1970,
with
a population of 204,879,000, we had 79,627,000 people employed.
Since then, our population is up 2.4 per cent to 209,866,000, but the number of jobs
has
grown nearly 6 million, an increase of more than 7 per
cent--twice as much as
the growth in population.
During thi same period, personal income rose from $542 billion to $681 billion,
a
jump of 25 per cent. Sales of non-durable goods increased 24 per cent; durable
goods, 52 per cent. At the same time, prices went up 13 per cent. So it's clear
that
real buying power kept steadily ahead of inflation.
Now we must fight to pre serve this edge, and that is the job of the Admini tration,
the Congress and the American people. It is the people, moving in response to supply and
demand, who are the ultimate decision makers on inflation. Good, sound Federal polities
can help do the job,
Inflation is our No. 1 political issue. There are those who are seeking to make
political hay out of that issue. And the ironic fact is that they are the same people
who
touched off the inflationary pre ssures haunting us today by insisted in the
mid-Sixties that we could fight a costly war halfway across the world without a tax
increase the people who insisted we could have both guns and butter. These are the
same people who are today voting for budget-busting programs and thus are adding to
our inflationary woes.
I
say
it
is
the
ultimate in irresponsibility to
attack the
Administration on the inflation issue and at the same time vote for budget-busting
inflationary deficit spending. And yet many members of Congre 8 have been getting
away with such tactics for years.
There
is
no higher national priority today than to balance the Federal budget
as a means of fighting inflation. Deficit Federal spending robs the family budget
of purchasing power by bidding prices up, and results in more wasted tax dollars in the
form of interest payments on the national debt.
We are fighting inflation on four fronts. We are seeking to balance the budget.
have adopted a stiff new set of price controls. The Federal Reserve Board is keeping
a tight rein on the money supply. And the Administration and the Congress have
acted to encourage greatly expanded production of food supplies, with the hope not only
of halting the rise in food prices but eventhally lowering them.
The most important a ction the Congres can take now to cope with inflation
is to deal responsibly with the fiscal 1974 Federal budget.
During fiscal 1973, the level of Federal spending was held to $247 billion, largely
-3-
due to the President's courageous refusal to spend billions of dollars
appropriated by the Congress. During the first six months of this calendar year,
income was practically matching Federal expenditures.
In fiscal 1974, the President has announced that spending should be held to the
$269 billion level. If Congre 86 will cooperate, we can have a balance budget this
fiscal year. And a budget that is balanced will help blunt the edge of inflation.
The economy is cooling off, and yet price inflation remains acute. Because
inflationary pressures are still strong and there is danger of a credit crunch,
there is talk of a tax increase.
The problem is how to continue to
fight inflation without squeezing SO hard
that the slowdown turns into a full-fledged recession.
I am opposed to an increase in income taxes, even in the form of a 10 per cent
surcharge that would be refundable at a later date.
without it
I am opposed to a tax increase at this time because I think WB can make a soft
landing
as the economy cools off in the months ahead,
I think we would
land with a thump if the proposed surcharge were to be imposed.
The slowdown in economic growth is undeniable, and it is happening without an
increase in# taxes.
In the second quarter of 1973, the U.S. economy grew than one-third as fast
as in the previous two quarters. Industrial production virtually levelled off recently,
as did retail sales.
This
I don't think this means that recession lies ahead. Slower growth does not reflect
any widespread weakness in business. On the contrary, the economy is growing le
rapidly primarily because fast growth is no longer possible in many industries. There
are no longer enough underutilized machines, enough skilled workers or enough basic
materials to support the kind of production gains that were made earlier in this period
of expansion.
The underlying forces of expansion are still dominant, along with
accompanying ind inflationary pre sures.
Yet the economy is unmista kably cooling off, and signs of slower growth will
increase over the next fe W months. This means that the months ahead will be a most
difficult period for those charged with determining U.S. economic policy. We must not
yield to the temptation to ease up in our fight against inflation. We must not prematurely
institute policies of fiscal or monetary ease. This would surely serve to perpetuate
inflation.
I think the course of wisdom is one of continued restraint.
LIBRARY
we are
At the same time, I believe there is cause for some optimism, reason to believe
-4-
making progress in dealing with our No. 1 domestic problem--inflation.
The worst is behind us in terms of food price inflation.
Record wheat, corn and
soybean crops are in prospect. And although this development will be offset by
continuing strong
overseas demand, the effect on domestic prices should be
salutary.
I predict that the prices
of goods, generally, will come down in the second
half of 1974.
The best way to control inflation is to expand production. And in that respect
we are at a crossroads in the effort to contain inflation.
We must aim at a closer balance between gains in national wage and benefit increases
and gains in national productivity.
A closer balance between compensation and productivity does not imply slower growth
in living standards. Rather, it promises more ræid economic growth, larger increases
in employment and income, a more profitable busine 8 sector, higher capital investment,
and a diminished erosion in real incomes.
Clearly, this would combine the best of all worlds--and it is the goal on which we
must set our sights.
######
FORD LIBRARK
OFFICE COPY
Rexmarks by Rep. Gerald R. Ford before the National Life Advertisers Association at
10:30 a.m. Wednesday, Sept. 26, 1973, in the Regency Balllroom of the Shoreham
Ams icana Hotel, washin ton, D.C.
It is difficult to perceive it amidst all the moaning and the groaning but we
are riding the crest of an economic boom.
There is moaning and groaning for a number of reasons--one being that the stock
pawed
market *n is being clawed and by tho bears. But the chief reason is inflation.
Of all the problems the United States has been faced with over the last decade or
so, the one that has been the most persistent, the most pervasive and the most
perverse has been inflation.
The control of inflation under conditions of prosperity
in peacetime is the
dominant domestic challenge of the Seventies as the United State struggle S with the
problem of rebuilding its competitive position in world markets.
americans
You know that i flation imposes an unjust burden on everyone but that
retired
and persons on fixed income suffer the most. In recent months, galloping food price
inflation has brought cries of anguish from all of US. In the final analysis,
inflation is justa plain confiscation of income for everyone. Furthermore, the rising
costs of doing busine SE threaten jobs. This means that the economic strength of the
nation at home and in world markets is clearly threatened.
It is against this backgrop that I talk with you today about general economic
conditions in the United States--and the continuing challenge that faces us.
in the Seventies,
We have all become economy-watchers and our experience in that regard is
much like parents whose child is slow in learning to talk. When the child finally
does
tak, the flood of words is watersk a bit too much for us.
So it has been with the economy. We were impatient throughout 1970 and 1971--and
on into the spring of 1972--as the busine recovery appeared
sluggish. Then business activity crurted, and in recent months a very different problem
has emerged--a rapid acceleration of general price inflation.
In the first quarter of 1972,
our unused re sources
seemed
adequate
to
accompodate a long and sizable uptrend in sales and output.
=
The national unemployment
rate
remained stuck at nearly 6 per cent. Only 75 per cent of the nation's menufacturing
facilities were in use. Frice and wage controls, aided by competitive forces, appeared
to have dampened the wage-price spiral.
Beginning with the second quarter of 1972, the uptrend in sales and output gained
speed. Since then, virtually all sectors of the economy have shown significant g ains.
Now the United States economy is riding a boom. Our gross national product is
FORD
running at a rate of $1,272 billion. There are 3 million more people working today tha n
LIBRARY
a year ago. Unem loyment is at a rate of 4.8 per cent, down sharply from the 6 per cent
figure where the needle Was stuck for so long. E : here are 84.4 million jobs, an all-time
-2-
record, and wages are also at an all-time high. There were 1.6 million new jobs created
in the first six months of 1973, alone.
In 1970, with
a population of 204,879,000, we had 79,627,000 people employed.
Since then, our population is up 2.4 per cent to 209,866,000, but the number of jobs
has
grown nearly 6 million, an increase of more than 7 per
cent--twice as much as
the growth in population.
During thi same period, personal income rose from $542 billion to $681 billion,
a
jump of 25 per cent. Sales of non-durable goods increased 24 per cent; durable
goods, 52 per cent. At the same time, price went up 13 per cent. So it's clear
that
real
buying power kept steadily ahead of inflation.
Now we must fight to preserve this edge, and that ic the job of the Admini <tration,
the Congress and the American people. It is the people, moving in response to supply and
demand, who are the ultimate decision makers on inflation. Good, sound Federal polities
can help do the job.
Inflation is our No. 1 politic issue. There are those who are seeking to make
political hay out of that issue. And the ironic fact is that they are the same people
who
touched off the inflationary pre sures haunting us today by insiste in the
mid-Sixties that we could fight a costly war halfway across the world without a tax
increase the people who insisted we could have both guns and butter. These are the
same
people
who
are
today
voting for budget-busting programs and thus are adding to
our inflationary woes.
I say it is the
ultimate in irresponsibility to
attack the
Administration on the inflation issue and at the same time vote for budget-busting
inflationary deficit spending. And yet many members of Congre & have been getting
away with such tactics for years.
There is no higher national priority today than to balance the Federal budget
as a means of fighting inflation. Deficit Federal speniing robs the family budget
of purchasing power by bid.ing prices up, and results in more wasted tax dollars in the
form of interest payments on the national debt.
We are fighting inflation on four front. We are seeking to balance the budget.
have adopted a stiff ne set of price controls. The Federal Reserve Board is keeping
a tight rein on the money supply. And the Administration and the Congress have
acted to encourage greatly expanded production of food supplies, with the hope not only
of halting the rise in food prices but eventbally lowering them.
The
most
Experies
important a ction the Con tress can take now to cope with inflation
is to deal responsibly with the fiscal 1974 Federal budget.
During fiscal 1973, the level of Federal spending was held to $247 billion, largely
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due to the Fresident's couregeous Ammondments refusal to spend billions of dollars
appropriated by the Congress. During the first six months of this calendar year,
income was practically matching Federal expenditures.
In fiscal 1974, the President has announced that spending should be held to the
269 billion level. If Congre g will cooperate, we can have a balance budget this
fiscal yeer. And a budget that is balanced will help blunt the edge of inflation.
The economy is cooling off, and yet price inflation remains acute. Because
inflationary pressures are still strong and there is dan: er of a credit crunch,
there is talk of a tax increase.
The problem is how to continue to fight inflation without squeezing so hard
that the slowdown turns irto a full fledged recession.
I am opposed to an increase in income taxes, even in the form of a 10 per cent
surcharge that would be refundable at a later date.
without it
I am opposed to a tax increase at this time because I think we can make a soft
landing
its
as the economy cools off in the months ahead
end
I
think
we
bould
land with a thump if the proposed surcharge were to be imposed.
The slowdown in economic grow th is undeniable, and it is happening without an
increase in# taxes.
In the second quarter of 1973, the U.S. economy grew le than one-third as fast
as in the previous two quarters. Industrial production virtually levelled off recently,
as did retail sales.
This
I don't think this ans that recession lies ahead. Slower growth does not reflect
any widespread weakness in business.
n the contrary, the economy is growing less
rapidly primarily because fast growth is no longer possible in many industries. There
are no longer enough underutilized machines, enough skilled workers or enough basic
materials to support the kind of production gains that were made earlier in this period
of expansion.
The underlying forces of expansion are still dominant, along with
accompanying inflationary pro sures.
Yet the economy is unmistalkably cooling off, and signs of slower growth will
increase over the next few months. This means that the months ahead will be a most
difficult period for those charged with determining E U.S. economic policy. We must not
yield to the temptation to ease up in our fight against inflation. We must not turely
institute policies of fiscal or monetary ease. This would surely serve to perpetuate
inflation.
I think the course of wisdom is one of continued restraint.
we are
At the same time, I believe there is cause for some optimism, reason to believe
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msking progress in dealing with our No. 1 domestic problem--inflation.
The worst is behind us in terms of fo d price inflation.
Record wheat, corn and
soybean crops are in prospect. And although this development will be offset by
continuing strong overseas demand, the effect on domestic prices should be
salutary.
I predict that the prices # of goods, generally, will come down in the second
half of 1974.
The best way to control inflation is to expand production. And in that respect
to are at a crossroads in the effort to contain inflation.
We must aim at a closer balance between gains in national wage and benefit increases
and gains in national productivity.
A closer balance between compensation and productivity does not imply slower growth
in living standards. Rather, it promises more rapid economic growth, larger increases
in employment and income, a more profitable busine F sector, higher capital investment,
and a diminished erosion in real incomes.
Clearly, this would combine the best of all worlds- and it is the goal on which we
must set our sights.
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