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The original documents are located in Box 1, folder "1/15/75 - State of the Union Address,
94th Congress (Includes drafts) (1)" of the President's Speeches and Statements: Reading
Copies 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. Gerald Ford 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 1 of President's Speeches and Statements: Reading Copies at the Gerald R. Ford Presidential Library
1
LIBRARY FORD y BERRLO
as we move forward in The
to braden + strengthen world place
months ahrel whicher it be in the
middle East, Europe, ann, Laten
00 africa we must have the tools to
do the job.
Our metting fores are strong +
meady. Our all whatever smithing meaponsh
mething
program is successful, This, strength
dates appression against our allies, stableys
former
our relations with H adversances +
r postects our homeland. Fully adquate
2
conventional + Atrategue frees cost billions
R. FORD LIBRARY
GERALD
but these dollars are a smal
insurance for our safety 4 n more
procedul world,
Melting wingons ant not our only
Mattay determiner is not other only
method of preventing conflict & burdhing world
understanding. effective hystomacy is a by
Vladivostok
to porgress. The Violerstock negotantions mith
The Soirt Yorm whe incompl. These
relations with our allies, the French, are
good decame of recent discussions in
3
Martinegue. The visits to Japan + South Korla
lmight better understanding + a strengtheners services of sur
FORD LIBRARY
But we have, challenges before us -
R
that meguine cooperation between the Consent
& the Congress. By The Constatution 4 tradition
foreign policy was effectant by the President.
In recent years under The stress f the
Victorm
was lipdature restructions on the Presidents
capablity to Avente foreign & smeting decemms
prolipated. as a member of the Congress
2 opposed some 4 appoal others. as Present
2 suchame The advice 4 corporation 7 the
Hown or Smite. in neturn you my
H
R. FORD LIBRARY
have full But, of our
foreign
policy is to be successful the cannot
in legalation
vegidly vistrict the Born fther President
to act: The conduct migatration is
2 pledge
ill- sutted to such limitations, This
administration will act in the clount
as we mut
consultations policate & with the Company
these global problems
the truble times throughout The globe
Tet me shift from our domestic
economic + energy wirenstanced to the
global preture.
From N.S.C.
by Secretary Kissinger
1/9/75
STATE OF THE UNION
peacetime
At no time in our history has the state of the nation depended more
1
heavily on the state of the world. And seldom if ever has the state of
the world depended more heavily on the state of our nation.
-- The economic crisis is global. We will not solve it at
home unless we remedy the profound economic dislocation
international
now afflicting the world. The orld trade and monetary
systemsprovides al r markets abroad and our imports of
vital raw materials, it provides man's basic needs for food,
for energy, and for progress. All this is dependent on a
global system of orderly economic ties and orderly growth.
This international system is now in jeopardy.
-- And it still is a world of political turmoil. This nation
can be proud of significant achievements in recent years in
solving problems and crises. The Berlin Agreement, the
SALT agreements, our new relationship with China, the
unprecedented efforts in the Middle East -- are of lasting
significance. But the world is not free from crises. A world
of 150
nations, proliferating nuclear technology, and con-
tinuing regional conflicts is a world in which international
security eannot be taken for granted.
7
so what is not make, our mission. - 2 -
So Let there be no mistake about it: interdependence is a vital
fact of our lives today. Interdependence is in the highest interests of the
United States. This is not a moment for the American people to turn
inward. More than at any time in a generation -- possibly in our history --
our own well-being depends on America's determination and leadership
in the world arena.
-- Our economy produces one-third of the world's goods.
Our economy, more than any other, determines the economic
health of the rest of the world. But the converse is even more
true -- that a strong US economy cannot exist in an economically
sick world.
a great nation - economically, melitary & diplomatically
-- We are the world's strongest power. America's commit-
ment to international security has sustained the safety of allies
and friends in many areas -- in the Middle East, in Europe,
in Asia. Our turning away would unleash new instabilities
and dangers around the globe which would in turn destroy our
own security and tranquility.
At the end of World War II, we turned a similar challenge into
an historic achievement. An old order was in disarray; political and
economic institutions were shattered. In that period this nation and
its partners built new institutions, new mechanisms of mutual support
- 3 -
and cooperation. We acted creatively, imaginatively, boldly. We
overcame fear by seizing the initiative and shaping our own destiny.
We did not seek such responsibilities. But we have borne them --
successfully -- and thereby safeguarded our own interests and our own
well-being. The whole world is watching to see how we respond today.
So the measures we have on our agenda today are vital. A
resurgent American economy would do more to restore the confidence of
the world in its own future than anything else we can do. The program
that this Congress will pass will demonstrate to the world that we have
put our own house in order. It will demonstrate that this nation is able
and willing to help other nations meet the common needs of man for
energy, food, and progress. It will demonstrate that this nation has
assumed full
taken up its responsibility to lead us out of the current crisis.
The Foreign Policy agenda is equally serious.
-- At stake is the future of the industrialized democracies,
who have perceived their destiny in common and sustained
it in common for 30 years. Our decisive action now is
essential -- not simply to pool technology, but even more
to recover our sense that our future is in our own hands,
not at the mercy of external forces. The health of freedom
in many countries will be affected by our success.
- 4 -
-- The developing nations are also at a turning point. For
the poorest nations, their ability to feed the hungry and their
hopes for economic development are literally at stake. For
the producers of raw materials, their long-term economic
future, too, depends on a cooperative solution to the current
crisis.
-- Our relations with the Communist countries are a basic
determinant of the world environment. If we seek peace,
we must seek to stabilize these relationships and build a
long-term basis for our coexistence. We will stand by our
principles and our interests; we will act firmly when challenged.
But the kind of world we seek to build depends on a broad policy
of creating mutual incentives for restraint and for cooperation.
Separatize
Let me say a word about Indochina.
page
The United States paid dearly in blood and treasure to defend a
brave ally against external attack. We succeeded, and then we came
home. 50, 000 Americans died there; only a few years ago we were
spending $30 billion a year. Today all that the Vietnamese ask of us
dollars & weapons
is sufficient assistance to maintain their own defense. The question
we face is whether this country and this Congress -- after all the
- 5 -
sacrifices that have been made -- will now deprive our brave allies
of the means for their own defense. as they struggle alone we must not
short - change them.
I will shortly ask the Congress, therefore, for additional funds
for economic and military aid to South Vietnam and Cambodia. The
world will judge from our action whether the United States is a nation
that stands by its allies and its principles.
Foreign assentance for humans purposes those lene well n
Forum assistance is an integral part of our our security has
always been be substantial thoust of american generaty. It in will the future be
The American people look to their elected leaders to set our with P.L
course. I as President, and you as the Congress, have our separate
Tachnol
480,
responsibilities. We are both accountable for the success or failure of
our effort.
Place cops.
When I first came before you in August, I said: "As President,
within the limits of basic principles, my motto towards the Congress is
communication, conciliation, compromise, and cooperation.' This is
my enduring commitment. No foreign policy can be sustained without
the understanding and support of the people and the Congress. The
Congress, by its oversight and appropriations and its specific legislative
responsibilities, helps define the broad outline of national policy.
But I would not be fulfilling my responsibility as President
for the conduct of our diplomacy if I did not fight -- and fight hard --
FOURTH DRAFT
PRESIDENT'S STATE OF THE UNION MESSAGE
January 14, 1975
THE PRECIDENT 1128 SEEN
Mr. Speaker, Mr. Vice President, Members of the 94th
Congress and distinguished guests:
Twenty six years ago a freshman Congressman, a young fellow
with lots of idealism who was out to change the world, stood
before Speaker Sam Rayburn in the well of this House and solemnly
swore to the same oath you took yesterday. That is an enobling
and unforgettable experience, and I congratulate you all.
Two days later that same freshman sat in the back row
over there somewhere as President Truman, all charged up by his
single-handed election victory, reported as the Constitution
requires on the State of the Union.
When the bipartisan applause stopped, President Truman
said:
"I am happy to report to this Eighty-first Congress that
the state of the Union is good. Our Nation is better able than
ever before to meet the needs of the American people, and to
their
give them/fair chance in the pursuit of happiness. It is
foremost among the nations of the world in the search of peace. "
- 2 -
Today the freshman Member from Michigan stands where Mr.
Truman stood and I must say to you that the State of the Union
is not good,
Millions of Americans are but of work.
Recession and inflation are eroding the money of millions
more.
Prices are too high and sales are too slow.
about
This year's Federal deficit will be/$30 billion; next
year's probably $45 billion.
rederal ail-t-
The national debt will rise to over 600 billion,
\
Our plant capacity and productivity are not increasing
fast enough.
We depend on others for essential energy.
Some people question their government's ability -- mine
and yours -- to make the hard decisions and stick with them.
from
They expect / Washington politics as usual.
Yet, what President Truman said on January 5, 1949 is even
more true in 1975.
(MORE)
- 3 -
We are better able to meet the peoples' needs.
A11 Americans do have a fairer chance to pursue happiness.
Not only are we still the foremost nation in pursuit of
peace, but today's prospects of attaining it are infinitely
brighter.
Mr. Truman said the State of the Union in 1949 was good
and I say it is bad. Yet future historians, surveying the sta-
tisties, may say we were both wrong.
In comparable dollars, the medium family income for all
Americans has doubled during those 26 years.
There were 59,378,000 Americans, not counting the military,
employed at the start of 1949. Now there are 85,924,000 who
have jobs.
Most astonishing of all, our gross national product in
-
the postwar boom of 1949 stood at $259 billion. But in today's
recession it is $1,416 billion, over five times as great.
Now I want to speak very bluntly.
(MORE)
- 4 -
What future historians say about 1975 is not so important
to you and to me as what the American people say about us in
1976. And unless we get things going again, we will not get scape
any their applanes wrath from
by Congress blaming the President or the President
blaming the Congress. The American people want action and it
will take both of us to give them what they want.
Z
- 5 -
as Specker albert said yearby
I want to work with you for national recovery. Let us not talk
of a Republican program or a Democrat program, of a conservative
program or a liberal program -- but of an American program.
Inflation and recession and the energy crisis and the future of our
Nation involve all Americans. I am willing to listen to all your proposals.
When they come to the White House, I will not look at the politics behind
the ideas but only at the potential good ahead. I will meet constructive
critics more than half way.
Let there be no shortage of energy in legislative movement between
Capitol Hill and the White House. Let's just make sure we are moving
in the right direction.
What we can do immediately is to begin to change our ways.
It will take months -- not days or weeks -- to see real progress, and
years to see real solutions, but progress and solutions can be achieved.
And they will.
p.4
- 6 -
Part of our trouble is that we have been self-indulgent. For
decades we have been voting ourselves ever-increasing levels of
government benefits, and now the bill has come due.
Earlier, I mentioned the anticipated federal deficits -- for fiscal
year 1975, $30 billion; for fiscal 1976, $45 billion. Both of these are
bad news. But let me add another element. The federal debt is
$483. 6 billion. Because of these deficits, the debt limitation will have
?
to be raised by $
.
A year ago, when the 1975 budget was submitted, the anticipated
deficit was $ 9.4 billion. In the interim, however, lower tax receipts of
$ 10 billion and higher unemployment payments of $ and
public service employment costs of $ 9 billion and other anti-recession &
?
expenses of $ 3 billion -- all of these added $22 # billion to this year's
federal deficit.
Is the current recession the only or fundamental cause of our
federal financial difficulties? No, there is a far more basic problem.
- 7 -
a major element in
The roowof our national economic problem is the growth of
programs.
federal spending/ We have been adding so many new programs tha the
size and growth of the federal budget has taken on a life of its own. In
1865, federal expenditures rose beyond the $1 billion mark for the first
time. It took 76 years more, till 1941, for federal expenditures to
go beyond the $10 billion level. It took only 20 more years for federal
expenditures to rise beyond the $100 billion mark. In just 8 more years
federal spending reached $200 billion, and just 5 years later, the present
fiscal year, federal spending passed the $300 billion mark. We are
now adding some $40 to $50 billion to federal expenditures each year.
We have developed a whole series of special programs that
contribute to the well being of tens of millions of persons: social security,
medicare, food stamps, veterans benefits, welfare, unemployment
insurance. But we have not considered fully the effects of our efforts
to pay for these programs.
- 8 -
One characteristic of these programs is that their cost increases
automatically every year because the number of people eligible for
most of these benefits increases every year. When these programs
are enacted, there is no dollar amount affixed to them. We do not
know what they will cost. All we know is that whatever they cost this
year, they will cost more next year.
It is a question of simple arithmetic. Unless we check the excessive
growth of government expenditure, or impose on ourselves matching
increases in taxes, we will run as we are huge inflationary deficits
in the federal budget.
I have already submitted to the Congress a list of budget cuts
and there are more recommended in the budget I will present to the
Congress. Even so the level of billion of outlays for fiscal year 1976 is
still much too high. Not only is it too high for this year but the decisions
we make now will inevitably have a major and growing impact on
- 9 -
expenditure levels in future years. If we project the current built-in
momentum of federal spending through the next 15 years, federal, state,
and local government expenditures could easily comprise nearly half
of our gross national product by 1990. This compares with less than
a third in 1975.
As a consequence, there must be no new spending programs
for fiscal 1976, except for our energy program. We must limit
the size of the automatic cost-of-living increases associated with
many programs, including social security, to a limit of 5 percent
this year. Federal employee and retirement pension increases must
come under the same 5 percent limit.
None of these recommended ceiling limitations, over which the
Congress has final authority, will be easy to make, since in most
cases they involve anticipated payments to deserving persons. Nonetheless,
- 10 -
it must be done. I recommend the action with great regret. I must emphasize
that I am not asking that we eliminate or reduce these programs. I am
recommending that we slow down to 5 percent the rate at which these programs
will expand.
Now, what is wrong with such sizable federal deficits? Some
people, including some economists, think that a government budget deficit,
45
even larger than the $ billion, we are estimating for next year, is not a
bad thing. Let me explain why I think it is essential for us to avoid
deficits of that size, except on a very temporary basis.
When there is a budget deficit, the federal government competes in the
money markets for funds that private businesses need to expand their
productive capacity. It is difficult, if not impossible, for private
citizens
to compete on equal terms with the federal government when the government
needs to borrow money. The government will borrow all its needs to cover
the deficit no matter how high the interest rates go up. But many private
- 11 -
borrowers cannot borrow when interest rates go too high and will try, instead,
to get along without the money. Businesses will cut back on their plans for
investment in added production, which means cutting back on the number of
workers they will need. And individuals cannot afford to buy homes, cars, and
household goods, when interest rates go too high. Sales fall off and
this leads to recession and rising unemployment.
If, in response, the Federal Reserve system attempts to make up for
the excess credit that the Federal government pre-empts, it will print too
much money, which leads to inflation and, eventually, also to recession.
Only a reduction in the growth in spending, in my opinion, can keep
federal borrowing down and reduce the damage to the private sector from high
interest rates. Only a reduction in spending can make it possible for the
Federal Reserve System to avoid an inflationary gorwth in the money supply and
thus restore balance to our economy. Only a major reduction in federal spending
can dispel the uncertainty that so many feel about our economy, and put us on the
- lla -
1
way to curing the economic disease called "stagflation. 11
Bitter medicine is never pleasant, but if we are sensible we
swallow it because it is better than being sick. Let us not turn away from this
- MORE -
- 12 -
medicine because it is bitter, but let us instead consider what the
consequences will be if we do not take our medicine.
If we do not act to slow down the rate of increase in federal
spending, the United States Treasury will be legally obligated to
spend more than $365 billion in fiscal year 1976 -- even if there are
no new programs voted.
Once again we would find ourselves with rapid inflation, followed
almost immediately by a recession probably much worse than the one
we are experiencing today. These are not matters of conjecture or
prediction, but of simple arithmetic. The size of these numbers and
their implications for our everyday life and the health of our economic
system are truly sobering.
The urgent need for us to stop the growth of federal spending is
intensified by the fact that the current situation makes a tax cut essential.
We must restore purchasing power to consumers, and incentives to businesses
to start investing in making more jobs instead of laying off workers.
- 13 -
One immediate step we can take is to reduce taxes.
A tax cut is needed now. Incomes have been rising although real
purchasing power has declined as a result of inflation. These income
increases have had the effect of putting many in a higher tax bracket
and that, in effect, has been a hidden tax-rate increase.
(MORE)
14-
To stimulate business and industry and to give people cash to
spend, I request an across-the-board, one-year tax reduction of
$16 billion. Three-quarters would go to individuals and one-quarter to
promote business investment. This is approximately the ratio that
individual income taxes bear to corporate income taxes.
This cash rebate to individuals amounts to 12 percent of 1974 tax
payments. Families will get as much as $1,000. It is a strong dose of
anti-recession medicine.
I call today on the Congress to act by April 1. If the Congress
does so, the Government can send the first check for half the rebate
in May and the second by September.
The other one-fourth of the cut, about $4 billion, will go to
businesses, including farms, to promote expansion and create more
jobs.
The one-year reduction would be in the form of a liberalized
investment tax credit increasing the rate from 4 percent to 12 percent
-15
for utilities and from 7 percent to 12 percent for all other enterprises.
I recognize that this tax cut does not embody the more
fundamental reforms needed in our tax system. But it puts us
in the right direction -- allowing the citizen rather than the
Government to spend earned income. A package of tax reform
requests
communicated
will be 1 to the Congress by
.
From adversity, let us seize opportunity. Now is the time
to remove the distortions to our tax system wrought by inflation.
People have been pushed into higher tax brackets by inflation
with a consequent reduction in their actual spending power.
Business taxes are similarly distorted because inflation exaggerates
reported profits -- meaning excessive taxes.
-16-
I am gravely concerned about America's rate of productivity.
During our rise to greatness, American plowed more and more
financial resources into new plants and equipment. Jobs expanded
to serve a growing population. In the last decade, our industrial
machine began slowing down. If we let it grind to tward mp a halt, our
nation would stagnate. We must change the direction and start increas-
ing productivity.
I have therefore asked the Vice President to take charge of a vital
new effort to lift our standards of productivity. With his help, I will seek
new methods to improve efficiency, to increase cooperation between
labor and management, to encourage capital investment, and to find
a proper balance between environmental protection and economic growth.
This will not be another interminable study. It will be done by
.
-17-
I have just completed an intensive review of the budget for fiscal
year 1976. Expenditures total $345 billion. This is an unacceptable
upward surge of anticipated spending.' It is based on well-intentioned
legislation enacted when our circumstances were better. In our present
national state of economic emergency, we simply cannot afford all of
these programs.
Conscious of my responsibility as chief executive, and mindful
of the realities of our budget, I have concluded that there must be a
one-year moratorium on new Federal spending programs. Except to
increase energy and meet emergency international security requirements,
I shall recommend no new spending. I regret that circumstances will
force me to veto any new appropriations adopted by the Congress with
the exceptions mentioned.
This forces me to request the Congress to immediately enact
legislation to pare down many programs and basically reform others.
-18-
At the same time, I urge you to place a 5 percent limit on
Federal pay increases even though comparability with nongovern-
mental wages might justify more.
In all Government programs tied to the consumer price index --
including social security, civil service and military retirement pay,
and food stamps -- I am asking for a 5 percent ceiling on increases
for this year.
These proposed limitations would realize an estimated $5 billion
savings in Federal outlays in 12 months. Washington should be practicing
what it preaches in budgetary restraint.
I will do my utmost to assure fairplay in this difficult period. When
there is less to go around, everybody must sacrifice. All must exercise
prices
restraint in demands for incrased profit -- or increased pay. The burdens of
the times must be equally divided, equally shared. Those who abuse their
economic power will hear from me. So will those who seek a free ride.
-19- -12-
We must provide new direction to our nation's income se-
curity system -- that tangle of programs which provides assistance
to the poor, the elderly, the sick, and to others. Today's
system, riddled with inefficiency and increasingly expensive,
serves the best interest of neither the recipients nor the tax-
payers. I will work with Congress to devise new, more efficient
and effective programs.
In the closing days of 1974, the Congress enacted and I
signed into law an emergency public service bill. It provides
jobs for 300,000 people now out of work. So far,
jobless have been put to work under this program. It extends
unemployment assistance for others. Let us agree today to con-
tinue assisting those who are hurt the most.
In my address to the Joint Session last October, I urged
enactment of legislation to stimulate the housing industry.
Working together, and with urgency, we got a good bill which
made most home mortgages eligible for purchase by an agency of
the Federal Government.
(MORE)
20
To date, $3 billion has been committed under this program for
the purchase of mortgages with interest rates varying from 8 to 8-1/2 percent,
in addition to the $13 billion of Federal funds made available for mortgage
purchases under other programs over the past twelve months.
There are hopeful signs - - such as lowered mortgage interest
rates and increased savings flows to our thrift institutions -- which have
appeared over the last three months and hold real promise for a significant
up-turn in the second half of this year. However, since the housing
industry presently continues in its most severe recession since the end
of World War Two, we must accelerate this anticipated upward trend.
Accordingly, I shall make available an additional $3 billion for
mortgage purchases, but this time with one-half of this amount devoted to a
special program for lower-priced homes. Under this special program,
the interest rate for a three bedroom new home costing less than $26,000
will be 5-3/4 percent -- well within the purchasing power of a family
at the Nation's median income of $13,000.
21
-
To summarize:
-- Petroleum is presently available from foreign sources -- but
at arbitrarily high prices, causing massive outflow of dollars, and
leaving us vulnerable to another embargo.
-- Domestic oil production continues to decline.
-- Total American petroleum consumption is increasing, although
at slower rates because of higher prices.
-- Natural gas shortages are forcing curtailment of supplies.
This is resulting in unemployment, reductions in production of fertilizer
to increase food supplies, and increased demand for alternative fuels --
especially imported oil.
0
-- Coal production is at about the same level as in the 1930's.
-- Nuclear energy accounts for only one percent of total needs.
New plants are being delayed, postponed or cancelled.
-- Overall energy consumption. is increased.
22
-- American vulnerability to a foreign oil embargo is increasing
with higher imports. It will continue to do SO until we take action.
I am today presenting the Congress with a plan to make us
invulnerable to cut-offs of insecure foreign oil. It will require sacrifices.
But it will work. As a first step, I am establishing the following national
energy goals to assure that our future is as secure and productive as
our past:
First, we must reduce oil imports by 1 million barrels per day
by the end of this year and by 2 million barrels per day by the end of 1977.
Second, we must end vulnerability to economic disruption by foreign
suppliers by 1985. This means that by 1985 we should import no more
than 3 to 5 million barrels per day, all of which must be immediately
replaceable from storage and standby measures in the event of a supply
disruption.
-24 -
We must develop our energy technology and resources so that
the United States has the ability to supply a significant share of the energy
needs of the Free World by the end of this century. All of these goals
involve economic and political costs. They cannot be fully achieved
through natural market forces operating within current national and
international policies.
To attain these objectives, we need drastic, immediate action
to cut imports. Unfortunately, our volunteer efforts have not achieved
what must be done. We have not acted with sufficient speed in developing
our coal, gas, oil and nuclear power. We need new energy conservation
programs. We need a new emergency standby program and a strategic
storage system which includes over one billion barrels of new oil storage.
In the short-term, there are only a limited number of actions
which can increase domestic supply. I intend to pursue all of them.
I propose quick action on legislation to allow commercial production
at the Elk Hills, California, Naval Petroleum Reserve of up to 160 thousand
- 25-
barrels per day as soon as possible in 1975, and up to 300 thousand barrels
per day by the end of 1977. The Secretaries of the Interior and Defense
have worked and will continue to cooperate with the Congress on needed
legislative authority.
In order that we make greater use of domestic coal resources,
I am submitting a set of comprehensive amendments to the Energy Supply
(MORE)
26
Both the EPA (ep) and FEA (NW have agreed on theme
and Environmental Coordination Act of 1974. 1 These will greatly increase
Any EPA
the number of energy producing plants that can be converted to coal in
angel
the next few years. The current law only allows 23, 000 barrels per day
of conversions in 1975. These amendments could allow almost 100, 000
barrels per day to be saved in 1975 and 300, 000 in 1977.
Voluntary conservation continues essential. The Federal Energy
Administration will step up its energy conservation public information
program. But tougher programs are also needed.
I am, administratively raising the fee on all imported crude
oil, natural gas liquids and petroleum products. The fee levels will be
11
one dollar per barrel effective February 1; two dollars on March 1; and
three dollars on April 1. The crude price equalization program and
product fee rebates will
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be modified to mitigate disproportionate benefits or adverse impacts
in any single area of our country.
The permanent legislative package I am requesting to conserve
energy use is a tough program. To summarize:
-- Excise taxes and import fees of two dollars per barrel on
all crude oil, and product imports.
-- Deregulation of new natural gas as previously proposed
by the Administration.
-- An excise tax of 37 cents per thousand cubic feet on all natural
gas to equal the two dollars oil excise tax on a thermal
equivalency basis.
-- - A windfall profits tax to ensure that no single sector of our
economy gains unduly while other make sacrifices. I will
also take steps to administratively decontrol the price of
crude oil on April 1 and urge Congressional enactment of
this windfall tax by that date.
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The administrative actions I am taking to initiate the cutback
of American dependence on foreign petroleum products will be phased
out when Congress completes action on the legislative package I have
just described. The sooner Congress acts, the more effective the oil
conservation program will be and the quicker the Federal revenues can
be returned to our people.
Accordingly, in addition to 1974 tax rebate, I propose that
income taxes for 1975 and thereafter, principally affecting lower and
middle income taxpayers, be reduced by increasing the low income
allowance and by reducing the tax rate for this group. The total tax
reduction will amount to about $16. 5 billion.
For example, the effect for a typical family of four with a gross
income of $5, 600 would pay no income tax at all. A family of four with
an adjusted gross income of $12, 500 would save $300 of the $1, 260 they
now pay. Families grossing $20, 000 would receive a reduction of $210.
29
For people who can least afford the damage done by inflation
and pay no income tax at all, I propose a payment of $80 to every
person 18 years of age and older. Such payments will total $1. 8 billion.
There will be a special credit to homeowners, totalling a half-
billion dollars, to give a 15 percent tax credit for up to $1, 000 of
expenditures on storm windows and doors or adding insulation to their
homes.
State and local governments will receive $2 billion in additional
revenue sharing to offset increased energy costs.
To offset inflation distortions and to generate more economic
activity, the corporate tax rate will be reduced from 48 percent to
42 percent. This will amount to $6. 5 billion.
The remaining $3 billion represents the Federal Government's
own cost for higher fuel prices.
This makes a total of $30 billion restored to the economy to deal with
the distortions and inequities caused by inflation and higher energy costs. It
goes mainly to reduce the taxation of low and middle income groups.
30
By 1985, the vulnerability of the United States to economic
disruption by foreign energy suppliers must be eliminated. To meet
the 1985 target:
Coal production must almost double; trends must be reversed
to realize our fullest potential in oil and gas production; nuclear power
must increase to more than ten times current levels; and emerging
energy sources have to accelerate.
The largest part of increased oil production will have to come
from wells drilled in major new frontier areas. Thus, our position
on Outer Continental Shelf leasing and development must be clear.
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Therefore, I now reaffirm that it is the intent of this Administration
to move ahead with exploration, leasing and production in those
frontier areas of the Outer Continental Shelf where the environ-
mental risks are judged to be acceptable.
Our Naval Petroleum Reserves Number 4 in Alaska has not yet
been significantly explored or developed. We have been consulting
and working with Congress and will soon forward legislation to
authorize the exploration, development, and production of NPR-4
to provide petroleum for the domestic economy and military needs.
Our most abundant domestic resource, coal, is severely
limited by markets. We must strike a new compromise on en-
vironmental concerns with coal.
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I vetoed the strip mining legislation passed by the last Congress.
With some changes, I am prepared to sign a revised version into law.
The Federal Government owns over 200 billion tons of coal
reserves. Currently 16 billion tons on Federal lands are under lease,
although only 6 billion are currently scheduled to support production by
1980. To assure rapid production from existing leases and to make new,
low sulfur supplies available, I have directed the Secretary of the Interior
to adopt legal diligence requirements to assure production from existing
leases and to design a new program of coal leasing consistent with timely
development, adequate return on public resources, and environmental
protection.
To rejuvenate our lagging nuclear power program, I am announcing
a markedly increased budget appropriation for nuclear waste management
and for continued improvements in safeguards. I will also resubmit the
the Nuclear Facility Licensing Act and urge prompt Congressional action
on this bill.
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24 -
In recent months, utilities have cancelled or postponed over
60 percent of planned nuclear expansion and 30 percent of planned
additions to non-nuclear capacity. Financing problems for that industry
are worsening, badly needed jobs are lost, and the serious danger of a
lack of nuclear and coal generating capacity and increased dependence
on oil in the years ahead becomes more acute.
PROPOSING,
I am therefore presping, and will soon forward, legislation to
provide for:
-- An increased in the investment tax credit for electric utilities
from the current 4 percent to a level which eliminates the gap
between its tax credit and those of other industries.
-- While this higher investment tax credit will be available for all
industry in 1975, to stimulate the construction of coal and
34
nuclear plants, I will recommend the extension of the
credit for two additional years for these priority facilities.
-- Selective reform of state utility commission regulations.
The Federal Government must take actions to encourage and
protect domestic energy investment in the face of significant world price
uncertainty. To do so is the only way to ensure our progress to
energy independence by 1985.
To provide this stability for our energy production and
conservation program, I will request legislation to authorize tariffs,
import quotas or other measures to protect our energy prices at
levels which will achieve full national capability for self-sufficiency
and protect our energy industry and jobs.
Heating and cooling of buildings account for almost 20 percent
of total United States energy consumption. Energy savings of above
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30 percent can be realized by energy efficient construction. I
therefore propose legislation to make thermal efficiency standards
mandatory for all new buildings in the United States.
Since potential savings are even greater for existing homes,
I propose legislation for a new 15 percent tax credit for investments
of up to $1,000 for those owners of existing homes who add insulation,
storm doors and windows or other energy efficiency improvements
to their homes.
In addition, I am recommending today the establishment of an
energy conservation program for low-income families. Under this
program, which will be funded at $55 million in Fiscal Year 1976,
the Federal Government will purchase insulation supplies and have
volunteers install them.
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- 27.
To improve automobile efficiency, I propose legislation to
extend automotive emission standards for hydrocarbons and carbon
monoxide for 5 years at current California regulatory levels and
to implement a 3. 1 grams per mile nitrogen oxide standard.
Based on the passage of this amendment to the Clean Air
Act of 1970, I have received written pledges from the three largest
domestic automobile manufacturers that will enable us to make that 40
percent efficiency improvement in gasoline mileage.
Manufacturers of major household appliances must make a
similar effort. I am directing the Energy Resources Council to
set efficiency standards for major appliances, and to secure within
six months signed pledges from the appliance industry.
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These proposals and actions, taken together, can reduce our
dependence on foreign energy supplies to 3-5 million barrels per day by
1985.
I will propose standby emergency legislation and a new strategic
storage program of 1 billion barrels of oil for domestic needs and
300 million of storage for the defense to make the U.S. invulnerable to
any disruption of the remaining imports.
For the future, we must be able to help other nations through
development of new energy technology. We must, in the 1980's and
beyond, find new, cleaner ways to use coal. We must tap our gigantic
deposits of oil shale. We must develop solar, geothermal, nuclear,
and other energy forms. And these and other resources must be
developed in ways that do not unwisely damage the world's environment.
I will propose whatever funds are needed for future research
and development activities to ensure that America can maintain its
energy independence. I have also established a goal of 1 million barrels
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- 20a -
of synthetic fuels and shale oil production by 1985 and will implement
an incentives program to assure we achieve it.
If the Congress and the American people will now consider
these goals that I have set for the short-term, the mid-term and the
years beyond, I believe we can all agree that they are attainable.
This message is not intended to answer all the complex
needs of America.
Other aspects of the State of the Union will be addressed later.
Detailed messages on the Budget, the Economy and other messages to
the Congress will be submitted later. I will make specific recommen-
dations for domestic legislation such as general revenue sharing and
extension of the voting rights act.
Recession has joined inflation as Public Enemy Number One.
Our first concern is jobs. The jobs we seek are in the factories,
mines and oil fields -- on the farms and in the offices and shopping
39 -
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centers of America. Beginning today, every single recommendation
of this Administration will be mindful of the need for activation of
the American work force. Let us mobilize the most powerful and
creative industrial nation that ever existed on this earth.
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These major new programs will place us in a position to gain
international cooperation to deal with economic tactics that now threaten the
world.
I am directing the Secretary of State to establish within the
new International Energy Agency a broad international program of
energy cooperation in the areas of conservation and the development
of new energy supplies. By working together, oil importing nations
can reestablish an equitable balance between buyers and sellers in the
international oil market.
Over the next decade, internation al cooperation can reduce
Free World reliance on imported oil to an economically and politically
new
acceptable level. But we must also erect a series of oil and financial
safety nets to protect our vital interest through the next few
years.
41
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-
We urgently need new international financial arrangements to help
handle the huge balance of payments deficits caused by present oil prices
and to limit their destabilizing effect on our economies. We and other
consuming countries must construct arrangements which promote
financial solidarity and reduce our vulnerability. Economic disarray
could threaten democratic institutions, undermine political cooperation
and trade, and stimulate unpredictable international tensions. This
must not happen.
We are negotiating for courses of action on conservation,
emergency sharing and financial solidarity with friendly, industrial
nations.
INSERT KISSINGER SECTION HERE
43
That is why I come to this Congress with my hand outstretched,
but with my sleeves rolled up. I want to work with you, not fight
with you.
When I became President only five months ago, I promised
the last Congress a policy of communication, conciliation, compro-
mise and cooperation. I renew that pledge to the new members of
this Congress.
I
need not tell you this is a two-way street,
but I am prepared to meet you more than half-way down it.
also
I have alroady asked the American people for their support,
not for every number and every comma in this message, but for the
correct
basic changes in direction that are necessary to remedy what is
wrong and multiply what is good right about the State of our Union.
bad
I know that you will seek the support of your constituents
in the same spirit because they are, after all, the same constituents
as mine.
now
My economic recovery program and energy plans are not perfect.
AS a nan product of Gongress
I expect your great branch of our Federal
government to work its will upon them. I ask only three guiding
44
considerations: that they be treated as parts of a single problem
with an interlocking solution; that the will of the Congress con-
form to the real will of the American people; and that you act with
all possible dispatch.
"Delay is preferable to error," Thomas Jefferson is said to
have warned President George Washington at the outset of the American
Presidency. In the urgency of today's challenge I believe that
action is preferable to perfection. I believe we can best honor
our 200th birthday by looking to the future rather than the past.
If any people have the strength, the resolution, the ex-
perience, and the ability to maintain their freedom, we are that
people. I am confident that we will limit ourselves and govern
ourselves wisely, as we have done for almost 200 years. We make
blunders, we lose our way, but we have sound fundamental principles,
we have a wise and tested Constitution, and we have the principles
and the Gettyburg address
of the Declaration of Independence i to guide US. We rarely measure
up to those stern standards, but we always know how to measure
ourselves and by how much we have fallen short, and what we must