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The original documents are located in Box D19, folder "Detroit Chapter of the American
Bankers Association, March 24, 1966" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
RE: INFLATION
SPEECH BY HOUSE MINORITY LEADER GERALD R. FORD,
BEFORE THE DETROIT CHAPTER OF THE AMERICAN BANKERS ASSN.
ON MARCH 24, 1966.
Yesterday I created a little excitement in Washington and in some other
parts of the country by predicting that President Johnson would be forced to
ask Congress for another tax increase before the November elections.
The reason this caused a stir is that so many people look upon LBJ as a
political magician who can always be expected to pull another rabbit out
of the hat in this case, put off a tax increase request until after
November 8.
Well, I think he's running out of rabbits, and the chickens of inflation
are coming home to roost. So I don't think he can wait--no matter how much
he wants to.
I say this not in a spirit of malice, because I am sure that President
Johnson as well as the rest of us is dedicated to the welfare of the country.
It's just that his view of welfare is a lot different from mine. and yours,
too, I think.
Lyndon Johnson and the Democrats in Congress are in trouble, and it's
the kind of trouble that's spelled I-N-F-L-A-T-I-O-N. I've got to spell it
out for them because they refuse to admit it.
We've had creeping inflation for years, and now we're on the verge of
truly dangerous inflation. It's dangerous because it is steadily eroding the
value of the dollar and it could plunge us into a recession next year.
The Johnson Administration must bear the full blame for the inflationary
fever that threatens our economic well being. And it is the President alone
who must bear the burden of seeking another tax increase to cool it off.
We just got through passing a $6 billion tax bill, you know, and
Republicans don't want another. But the President isn't listening to us.
He is going the way that he laid out for himself last January when he foolishly
told the nation that we can spend billions upon billions in Vietnam and
continue to spend billions upon billions on new domestic programs.
(MORE)
FORD is LIBRARY GERALD
Digitized from Box D19 of the Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
-2-
FORD'S BANKERS SPEECH
MARCH 24, 1966
It is this kind of budgetary policy, coupled with an easy-money policy
the Federal Reserve Board has tried to curb, which has produced the inflation
now crowding in on US.
Shrewd politician that he is, President Johnson has sought to create
the impression that his is the course of fiscal integrity. He has muffled
the fact that the government will wind up the current fiscal year June 30
with a $6.4 billion deficit. He speaks proudly of a projected fiscal 1967
deficit of--he says- "only" $1.8 billion.
Well, you and I know that this so-called $1.8 billion deficit is a
pipe dream--a figure written invisible ink because it just won't be there
for anyone to read when the due bills and the tax money are stacked side by
side at the end of June, 1967.
So we Republicans are trying to cut Lyndon Johnson's $112 billion
budget. It's really $130 billion, but let's play along with him on the
figure and use his.
First of all, the President uses all kinds of gimmicks to come up with
the $1.8 billion deficit he's so proud of--and since when should anybody be
proud of a deficit? And then he includes in this phony budget reductions in
good sound programs that have proved their worth.
He knows Congress is not going to cut the ground out from under our
great land-grant colleges like Michigan State University by withholding most
of their federal supporting funds.
He knows Congress is not going to chop the school lunch and school milk
programs down to a bare minimum.
He knows Congress is not going to erase most of the support which has
been going to our agricultural extension program.
He knows Congress is not going to virtually wipe out federal school
construction aid for areas impacted by the youngsters of federal workers or
of parents working on federal contracts.
Call these "sacred cows" if you will, but let's be honest about these
things. These are programs Congress is not going to cripple because President
Johnson wants to brag about holding the fiscal 1967 deficit down to a phony
$1.8 billion.
(MORE)
-3-
FORD'S BANKERS SPEECH
MARCH 24, 1966
He couldn't keep the deficit down to that figure anyway, even if
Congress threw political caution to the winds and put the axe to such pro-
grams as school lunch and school milk.
The reason is that his own liberal Democrats in the House right now are
busy jacking up the price tag on the Johnson Administration's new program of
aid to elementary and secondary schools the program of general aid to
schools which got started last year under the guise of helping needy children.
The Democrats who currently are planning to pump more money into the
program than requested by the President won't say just how much more it will
be. But you can be sure it will run to hundreds of millions of dollars
maybe close to another billion.
This is clear because for one thing the Administration wants to knock
out last year's provision for $400 million in incentive grants to school dis-
tricts otherwise ineligible for help under the School Aid Act, and the big-
city Democrats in the Education and Labor Committee are saying, "nothing
doing." They're saying this despite the fact that John W. Gardner, Secretary
of the Health, Education and Welfare Department, insists that any incentive
grants paid out under the 1965 School Aid Act will be nothing but a "windfall"
to the districts getting them. These are his own words. But things like
that don't bother the liberal Democrats on the House Education and Labor
Committee.
By the time the Democrats on this committee and other big-spender
Democrats in the Congress get through with President Johnson's budget--which
is phony to begin with--the fiscal 1967 budget total will shape up as a
much fatter figure than the one produced by Lyndon Johnson's sleight of hand.
It will be an inflated figure. The liberal Democrats will simply ignore
their boss on this one and they'll run right over Republicans in Congress
because, unfortunately, they outnumber us two to one We're going to change
that in November.
Getting back to the gimmicks in the budget, one of them was to get the
bankers to provide the funds for the National Defense Education Act's loan
program. The President was counting on getting the government out of that
lending program and this was one of the moves to make his fiscal 1967 budget
look good.
(MORE)
-4-
FORD'S BANKERS SPEECH
MARCH 24, 1966
But what he didn't realize is that you fellows couldn't take over the
load that quickly, and so he had to backtrack on his plan at least for fiscal
1967.
Government isn't run as efficiently as a business. It isn't run with
the high degree of efficiency you people attain in banking. It couldn't be--
no matter how much President Johnson talks about getting the greatest
possible value for every federal dollar.
You and I know there is waste and inefficiency in the Johnson Adminis-
tration simply because there is such a broad array of agencies operating in
the same field, with inevitable overlapping.
As I pointed out in a recent address there now are 42 separate federal
agencies involved in education programs alone. There are at least 252
welfare programs today, including 52 separate federal economic aid programs,
57 job training programs and 65 programs to improve health.
Now
is it any wonder that the federal
Endget
has not been balanced
since 1960 under President Eisenhower?
Democratic administrations have produced deficits totalling $34 billion
since Ike left office, and more large deficits are being manufactured by
President Johnson and the liberal Democrats in Congress.
That's why I say the economic policies of the Johnson Administration are
bringing us to the crisis point--the possible kickoff of runaway inflation.
The warning flag has been hoisted by the record rise for February in
the wholesale price index.
Supplier prices are going up. After mid-year, the stuff business buys
at wholesale will cost about 4 to 5 per cent more than last year.
Money is being poured into expansion. Businessmen enjoying record
profits aren't inclined to argue with suppliers over their prices. They
plan to raise their own prices, and this is becoming the prevailing attitude.
I know our automobile manufacturers are determined to keep the price of
cars steady.
But how long can they hold the line if the suppliers bump up their
prices and production costs go up due to more overtime and the shortage of
skilled labor?
(MORE)
-5-
FORD'S BANKERS SPEECH
MARCH 24, 1966
I'm worried about what inflation may do to the automobile industry, to
the auto worker, to Michigan's entire economy and the economy of the nation.
Now...what's the answer to the inflationary threat we face?
The President is so committed to a budget which provides $3.2 billion
more in fiscal 1967 for Great Society programs--and liberal Democrats are so
determined to vote more than Mr. Johnson has asked--that a second tax increase
seems inevitable.
The Republican answer--the better answer to inflation--is to cut federal
spending. But we don't hold the whip hand; we don't hold the reins of power.
There appears to be no way to reduce military spending, of course.
We could cut domestic spending manxgx enough to bring the budget into
balance--th change it from an inflationary budget to one which would carry
the burden of the Vietnam warparentriet and yet be restrictive enough to
promote stability in an economy that mmobviously has become overheated.
We could do this--hampansase inflatiomary pressures--without raising
taxes.
But I know tkm President Johnson and the liberal Democrats won't go for
any AM budget cuts-even judicious ones--and that is why I predict
the White House will ineaxxx have to ask for another tax increase.
You bankers know all aboutmx mortgages. Well, what the Johnson
administration is doing is to mortgage the future of the United States
with a bagful of "start *em now, pay later programs" that le ave the
people holding the bag.
RE: INFLATION
SPEECH BY HOUSE MINORITY LEADER GERALD R. FORD,
BEFORE THE DETROIT CHAPTER OF THE AMERICAN BANKERS ASSN.
ON MARCH 24, 1966.
Yesterday I created a little excitement in Washington and in some other
parts of the country by predicting that President Johnson would be forced to
ask Congress for another tax increase before the November elections.
The reason thiscaused a stir is that so many people look upon LBJ as a
political magician who can always be expected to pull another rabbit out
of the hat...in this case, put off s tax increase request until after
November 8.
Well, I think he's running out of rabbita, and the chickens of inflation
are coming home to roost. So I don't think he can wait--no matter how much
be wants to.
I say this not in a spirit of malise, because I am sure that President
Johnson as well as the rest of us is dedicated to the welfare of the country.
It's just that his view of welfare is a lot different From mine...and yours,
too, I think.
Lyndon Johnson and the Democrats in Congress are in trouble,and it's
the kind of trouble that's spelled I-N-F-L-A-T-I-O-N. I've got to spell it
out for them because they refuse to admit it.
We've had creeping inflation for years, and now we're on the verge of
truly dangerous inflation. It's dangerous because it is steadily eroding the
value of the dollar and it could plunge us into a recession next year.
THe Johnson Administration must bear the full blame for the inflationary
fever that threatens our economic well being. And it is the President alone
who must bear the burden of seeking another tax increase to cool it off.
We just got through passing a $6 billion tax bill, you know, and
Republicans don't want another. But the President isn't listening to us.
He is going the way that he laid out for himself last January when he foolishly
told the nation that we can spend billions upon billions in Vietnam and
continue to spend billions upon billions on new domestic programs.
(MORE)
GERALD FORD LIBRARY
-2-
FORD'S BANKERS SPEECH
MARCH 24, 1966
It is this kind of budgetary policy, coupled with an easy-money policy
the Federal Reserve Board has tried to curb, which has produced the inflation
now crowding in on us.
Shrewd politician that he is, President Johnson has sought to create
the impression that his is the course of fiscal integrity. He has muffled
the fact that the government will wind up the current fiscal year June 30
with a $6.4 billion deficit. He speaks proudly of a projected fiscal 1967
deficit of--he eays--"only" $1.8 billion.
Well, you and I know that this so-called $1.8 billion deficit is a
pipe dream--a figure written ininvisible ink because it just won't be there
for anyone to read when the due bills and the tax money are stacked side by
side at the end of June, 1967.
So we Republicans are trying to cut Lyndon Johnson's $112 billion
budget. It's really $130 billion, but let's play along with him on the
figure and use his.
First of all, the President uses all kinds of gimmicks to come up with
the $1.8 billion deficit he's so proud of--and since when should anybody be
proud of a deficit? And then he includes in this phony budget reductions in
good sound programs that have proved their worth.
He knows Congress is not going to cut the ground out from under our
great land-grant colleges like Michigan State University by withholding most
of their federal supporting funds.
He knows Congress is not going to chop the school lunch and school milk
programs down to a bare minimum.
lie knows Congress is not going to erase most of the support which has
been going to our agricultural extension program.
He knows Congress is not going to virtually wipe out federal school
construction aid for areas impacted by the youngsters of federal workers or
of parents working on federal contracts.
Call these "sacred cows" if you will, but let's be honest about these
things. These are programs Congress is not going to cripple because President
Johnson wants to brag about holding the fiscal 1967 deficit down to a phony
$1.8 billion.
(MORE)
-3-
FORD'S BANKERS SPEECH
MARCH 24, 1966
He couldn't keep the deficit down to that figure anyway, even if
Congress threw political caution to the winds and put the axe to such pro-
grams as school lunch and school milk.
The reason is that his own liberal Democrats in the House right now are
busy jacking up the price tag on the Johnson Administration's new program of
aid to elementary and secondary schools...the program of general aid to
schools which got started last year under the guise of helping needy children.
The Democrate who currently are planning to pump more money into the
program than requested by the President won't say just how much more it will
be. But you can be sure it will run to hundreds of millions of dollars
maybe close to another billion.
This is clear because for one thing the Administration wants to knock
out last year's provision for $400 million in incentive grants to school dis-
tricts otherwise ineligible for help under the School Aid Act, and the big-
city Democrats in the Education and Labor Committee are saying, "nothing
doing." They're saying this despite the fact that John W. Gardner, Secretary
of the Health, Education and Welfare Department, insists that any incentive
grants paid out under the 1965 School Aid Act will be nothing but a "windfall"
to the districts getting them. These are his own words. But things like
that don't bother the liberal Democrate on the House Education and Labor
Committee.
By the time the Democrats on this committee and otherbig-spender
Democrats in the Congress get through with President Johnson's budget--which
is phony to begin with--the fiscal 1967 budget total will shape up as a
much fatter figure than the one produced by Lyndon Johnson's sleight of hand.
It will be an inflated figure. The liberal Democrats will simply ignore
their boss on this one...and they'll run right over Republicans in Congress
because, unfortunately, they outnumber us two to one...We're going to change
that in November.
Getting back to the gimmicks in the budget, one of then was to get the
bankers to provide the funds for the National Defense Education Act's Loan
program. The President was counting on getting the government out of that
lending program and this was one of the noves to make his fiscal 1967 budget
look good.
(MORE)
-4-
FORD'S BANKERS SPEECH
MARCH 24, 1966
But what he didn't realize is that you fellows couldn't take over the
load that quickly, and so he had to backtrack on his plan at least for fiscal
1967.
Government isn't run as efficiently as a business. It isn't run with
the high degree of efficiency you people attain in banking. It couldn't be--
no matter how much President Johnson talks about getting the greatest
possible value for every federal dollar.
You and I know there is waste and inefficiency in the Johnson Adminis-
tration simply because there is subh a broad array of agencies operating in
the same field, with inevitable overlapping.
As I pointed out in a recent address...there now are 42 separate federal
agencies involved in education programs alone. There are at least 252
welfare programs today, including 52 separate federal economic aid programs,
57 job training programs and 65 programs to improve health.
Now... is it any wonder that the federal government has not been balanced
since 1960 under President Eisenhower?
Democratic administrations have produced deficits totalling $34 billion
since Ike left office, and more large deficits are being manufactured by
President Johnson and the liberal Democrats in Congress.
That's why I say the economic policies of the Johnson Administration are
bringing us to the crisis point--the possible kickoff of runaway inflation.
The warning flag has been hoisted by the record rise for & February in
the wholesale price index.
Supplier prices are going up. After mid-year, the stuff business buys
at wholesale will cost about 4 to 5 per cent more than last year.
Money is being poured into expansion. Businessmen enjoying record
profits aren't inclined to argue with suppliers over their prices. They
plan to raise their own prices, and this is becoming the prevailing attitude.
I know our automobile manufacturers are determined to keep the price of
cars steady.
But how long can they hold the line if the suppliers bump up their
prices and production costs go up due to more overtime and the shortage of
skilled labor?
LIBRARY
(MORE)
-5-
FORD'S BANKERS SPEECH
MARCH 24, 1966
I'm worried about what inflation may do to the automobile industry, to
the auto worker, to Michigan's entire economy and the economy of the nation.
Now...what's the answer to the inflationary threat we face?
The President is so committed to a budget which provides $3.2 billion
more in fiscal 1967 for Great Society programs--and liberal Democrats are so
determined to vote more than Mr. Johnson has asked--that a second tax increase
seems inevitable.
The Republican answer--the better answer to inflation--is to cut federal
spending. But we don't hold the whip hand; we don't hold the reins of power.
There appears to be no way to reduce military spending, of course.
GERALD FORD LIBRABY