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Roanoke Jaycees, Roanoke, VA, January 30, 1967
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The original documents are located in Box D21, folder "Roanoke Jaycees, Roanoke, VA,
January 30, 1967" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 D21 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
ROANOKE JAYCEES, ROANOKE, VIRGINIA - JAN. 30, 1967
THERE IS A NEW MOOD IN THE NATION TODAY. IT IS A MOOD
WHICH PRODUCED A CONGRESS WITH A NEW COMPLEXION. THIS NEW
CONGRESS CAN BEST BE DESCRIBED AS CAUTIOUS AND PRUDENT.
AS WE ORGANIZE TO CARRY OUT OUR WORKLOAD FOR 1967,
MEMBERS OF CONGRESS ARE ANALYZING THE NATION'S NEW MOOD.
I BELIEVE CONGRESSMEN FROM MY PARTY HAVE TAKEN AN
ACCURATE READING OF THAT MOOD--AND IT IS SIMPLY THIS:
OURS IS A NATION WHICH NO LONGER BELIEVES THAT THE UNITED
STATES CAN AFFORD BOTH GUNS AND BUTTER.
FRILLS AND RUFFLES
ALONG WITH RIFLES.
IT SEEMS CLEAR TO ME THIS ADMINISTRATION IS MISREADING
THE TRUE MOOD OF AMERICA. IF THE PRESIDENT HAD TAKEN THE
39
LIBRARY
-2-
NATIONAL PULSE PROPERLY, HE WOULD NOT HAVE SUBMITTED TO
THE CONGRESS ON JANUARY 24 A WHOPPING ADMINISTRATIVE BUDGET
WHICH CALLS FOR SPENDING A RECORD-BREAKING $135 BILLION IN
FISCAL 1968.
I AM NOT GOING TO CONFUSE THE ISSUE BY TALKING ABOUT
THE GOVERNMENT'S NATIONAL ACCOUNTS BUDGET, WHICH INCLUDES
THE TRUST FUNDS. THIS ADMINISTRATION'S BUDGET GIMMICKRY
IS DECEPTIVE ENOUGH WITHOUT LOOKING AT BOTH THE ADMINISTRA-
TIVE AND NATIONAL ACCOUNTS BUDGETS AT THE SAME TIME.
LET'S CONCENTRATE ON THE ADMINISTRATIVE BUDGET, THE ONE
MOST PEOPLE ARE FAMILIAR WITH, AND LET'S BEGIN WITH THE
FISCAL YEAR WE'RE IN NOW.
LAST JANUARY THE PRESIDENT SAID HE PLANNED TO SPEND
FORD
$112.8 BILLION IN FISCAL YEAR 1967 AND PEGGED THE DEFICIT
LIBRARY
-3-
AT $1.8 BILLION. INSTEAD HE NOW SAYS HE'LL BE SPENDING
$14 BILLION MORE THAN HE HAD ANTICIPATED--AND THE RED INK
FIGURE WILL RUN CLOSE TO $10 BILLION. IT'S AN INTERESTING
COINCIDENCE THAT THE INTEREST ON THE NATIONAL DEBT NOW
TOTALS SLIGHTLY MORE THAN $14 BILLION A YEAR. THIS IS THE
SECOND LARGEST SINGLE ITEM IN THE ADMINISTRATIVE BUDGET,
THE LARGEST ITEM AFTER NATIONAL DEFENSE.
THIS MONTH THE PRESIDENT DROPPED A $135 BILLION BUDGET
INTO CONGRESS'S LAP. IT CALLS FOR AN OUTLAY $22 BILLIONS
LARGER THAN THE FISCAL 1967 BUDGET AND $8 BILLION GREATER
THAN CURRENT FISCAL YEAR SPENDING ACTUALLY IS PROVING TO BE.
THERE'S ANOTHER COINCIDENCE. THE PRESIDENT IS PLANNING
TO SPEND $8 BILLION MORE IN FISCAL 1968 THAN IN THE CURRENT
FISCAL YEAR AND IS PLANNING A DEFICIT IN ALMOST PRECISELY
LIBRARY
THAT AMOUNT.
-4-
TO HOLD THE DEFICIT TO"ONLY" $8.1 BILLION, THE PRESIDENT
WANTS CONGRESS TO VOTE ABOUT $6 BILLION IN NEW TAXES. THIS
WOULD INCLUDE A 6 PERCENT INCOME TAX SURCHARGE AND AN
INCREASE IN POSTAL FEES.
THE ONLY SOUND REASON F OR A TAX INCREASE IN 1967 IS
THE PROSPECT OF A HUGE FISCAL 1968 DEFICIT AND THE DAMAGE
THAT MIGHT RESULT. NOW LET'S ASK OURSELVES WHY A BIG
DEFICIT? DEFICITS RESULT FROM HEAVY GOVERNMENT SPENDING,
SPENDING WHICH EXCEEDS GOVERNMENT INCOME. DOES THE GOVERN-
MENT HAVE TO SPEND FAR BEYOND ITS MEANS, YEAR AFTER YEAR?
YOU CAN REDUCE DEFICITS IN EITHER ONE OF TWO WAYS.
EITHER YOU CUT SPENDING AND BRING IT INTO REASONABLE
BALANCE WITH REVENUE, OR YOU INCREASE REVENUE. YOU INCREASE
REVENUE BY STIMULATING THE PRIVATE SECTOR OF THE ECONOMY,
LIBRARY
-5-
OR BY INCREASING TAX RATES AND HOPING THE ECONOMY REMAINS
HEALTHY ENOUGH TO PRODUCE A BIGGER TAX TAKE. AT THE SAME
TIME, YOU SHOULD FOCUS ON THE VERY IMPORTANT GOAL OF PRICE
STABILITY.
WHAT IS OUR PRESENT SITUATION?
WE BLUNDERED THROUGH THE YEAR 1966, A YEAR THAT SAW A
MAJOR MISTAKE IN UNITED STATES ECONOMIC POLICY. INFLATION
WAS THE NO. 1 PROBLEM, YET THE ADMINISTRATION CONTINUED TO
STIMULATE THE ECONOMY WITH INCREASED GOVERNMENT SPENDING.
THE RESULT--THE SHARPEST CONSUMER PRICE RISES IN NINE YEARS
AND A STAGGERING $9.7 BILLION DEFICIT.
NOW THE ECONOMY IS SAGGING IN MANY SPOTS. THE AUTOMOTIVE
INDUSTRY HAS BEEN HIT HARD BY A SLUMP IN NEW CAR SALES.
JUST LAST THURSDAY NEARLY 17,000 CHRYSLER AND CHEVROLET
-6-
WORKERS WERE LAID OFF INDEFINITELY. THE HOMEBUILDING
INDUSTRY IS JUST BEGINNING TO PULL ITSELF OUT OF A VIRTUAL
DEPRESSION. MAJOR HOME APPLIANCES ARE NOT SELLING WELL.
BUSINESS PROFITS, GENERALLY, ARE BEGINNING TO SLIDE.
AT THE SAME TIME, INFLATIONARY PRESSURES ARE CONTINUING.
WHILE THE DEMAND-PULL KIND OF INFLATION WE EXPERIENCED IN
1966 IS MODERATING, COST-PUSH INFLATION THREATENS REAL
TROUBLE FOR 1967. UNIONS ARE DEMANDINGE-AND MANY OF THEM
WILL GET--WAGE INCREASES AND FRINGE BENEFITS TOTALLING
BETWEEN 5 AND 8 PERCENT. THESE NEW CONTRACTS WILL REFLECT
NOT ONLY PRODUCTIVITY INCREASES BUT THE 3.3 PERCENT RISE
IN THE COST OF LIVING IN 1966.
THESE UNION MEMBERS AND ALL OTHER AMERICANS WERE FORCED
TO PAY THE HIGH PRICE TAGS OF 1966 INFLATION. NOW THE
GERALD LIBRARY
-7-
ADMINISTRATION PROPOSES TO ADD A 6 PERCENT SURCHARGE TO
THEIR TAX BILLS FOR 1967.
AS I MENTIONED EARLIER, THE ONLY SOUND REASON FOR A
TAX INCREASE IS TO REDUCE A DEFICIT OR COOL OFF AN OVERHEATED
ECONOMY. BUT THE ECONOMY ALREADY IS COOLING OFF, AND THE
POSSIBILITY OF A RECESSION IN 1967 CANNOT BE DISMISSED.
SHOULD WE THEN INCREASE TAXES TO EASE CREDIT? THAT
ADJUSTMENT ALSO IS UNDER WAY. IN ANY CASE, YOU CAN RELAX
TIGHT MONEY PRESSURES JUST AS WELL BY CUTTING NON-ESSENTIAL
FEDERAL SPENDING, THUS REDUCING GOVERNMENT DEMAND FOR
BORROWED FUNDS.
ONE OF THE TRAGEDIES OF THE PAST YEAR IS THAT THE
ADMINISTRATION WAS RETICENT ON FISCAL MATTERS. WHEN RIFORD
DID SPEAK OUT, IT SPOKE CARELESSLY.
GERALD LIDRARY
-8-
NO, I WILL GO FURTHER THAN THAT. TO BE ABSOLUTELY
CANDID ABOUT IT, THIS ADMINISTRATION CONCEALED THE TRUE
COST OF THE VIETNAM WAR. THOSE WHO ARE CHARITABLE SAY THE
ADMINISTRATION "UNDERESTIMATED" THE COST OF THE WAR BY
ABOUT $10 BILLION.
LET'S CALL A SPADE A SPADE. LAST YEAR WAS AN ELECTION
YEAR. NOW THAT THE ELECTION IS OVER, THE ADMINISTRATION
SUDDENLY KNOWS HOW MUCH THE VIETNAM WAR IS COSTING.
ALL LAST YEAR THE ADMINISTRATION WAS CAUGHT IN A KIND
OF ELECTION YEAR PARALYSIS. THE PRESIDENT HAD ENUNCIATED
A BUTTER AND GUNS POLICY IN HIS STATE OF THE UNION MESSAGE
OF JANUARY, 1966. HE REPEATED THAT THEME IN HIS 1966 BUDGET
MESSAGE. THIS MADE IT DIFFICULT FOR HIM TO ADOPT THE MONETARY
AND FISCAL POLICIES DEMANDED BY RISING INFLATION. INSTEAD
-9-
HE LEFT THE COUNTRY TO WRESTLE AND SUFFER WITH TIGHT CREDIT.
NOW, SUDDENLY, THE PRESIDENT SAYS WE MUST DEAL WITH
TIGHT CREDIT BY RAISING TAXES.
I SAY WE MUST CUT SPENDING BEFORE WE EVEN CONSIDER
RAISING TAXES.
THERE IS FAT IN THE PRESIDENT'S FISCAL 1968 BUDGET.
NOT ONLY THAT, THERE IS LARD IN THE FISCAL 1967 SPENDING
COURSE THE PRESIDENT NOW IS FOLLOWING.
I URGE HERE AND NOW THAT THE PRESIDENT CLAMP A SHARP
CURB ON DOMESTIC SPENDING IN THE REMAINING FIVE MONTHS
OF THIS FISCAL YEAR AND THAT HE SUBMIT A REVISED BUDGET
FOR FISCAL 1968.
BERALD ORD LIBRARY
I FEEL CERTAIN THE PRESIDENT COULD CUT SEVERAL BILLIONS
-10-
OUT OF THE FISCAL 1968 BUDGET IF HE WOULD SET A LOWER
CEILING ON IT AND INSTRUCT HIS BUDGET DIRECTOR TO SQUEEZE
OVERALL SPENDING UNDER THAT ROOF.
ONLY THEN COULD HE COME TO CONGRESS AND HONESTLY SAY
HIS PROPOSED 6 PERCENT INCOME TAX SURCHARGE WAS TO PAY
FOR THE VIETNAM WAR AND NOT FOR GREATER SPENDING ON HIS
GREAT SOCIETY SCHEMES. IN FACT, HE MIGHT THEN DECIDE TO
ABANDON HIS TAX INCREASE REQUEST.
IF THE PRESIDENT REFUSES TO RESUBMIT HIS BUDGET, THE
HOUSE APPROPRIATIONS COMMITTEE COULD FORCE HIM TO DO SO.
ALL THAT WOULD BE NECESSARY IS FOR MY GOOD FRIEND, GEORGE
MAHON OF TEXAS, TO REFUSE TO SCHEDULE HEARINGS ON THE
BUDGET BY THE APPROPRIATIONS COMMITTEE. THE PRESIDENT THEN
WOULD HAVE NO CHOICE BUT TO REVISE HIS SPENDING PLANS AND
LIBRARY
-11-
SEND A NEW BUDGET TO MR. MAHON'S COMMITTEE.
WE KNOW THE PRESIDENT'S $135 BILLION BUDGET IS GOING TO
HAVE TO BE CUT. THE BUDGET BUREAU, WITH ITS INTIMATE
KNOWLEDGE OF BUREAUCRATIC NICHES AND CRANNIES WOULD FIND
IT FAR EASIER TO DO THE JOB THAN A CONGRESSIONAL COMMITTEE.
WE ALL REALIZE THERE ARE JOHNSONIAN GIMMICKS IN THE
PRESIDENT'S TAX INCREASE PROPOSAL. IT WOULD NOT TAKE EFFECT
UNTIL NEXT JULY 1. IF THE ECONOMY IS STRONG ENOUGH TO
ABSORB IT AT MID-YEAR, THE TAX INCREASE WOULD BE HARD TO
OPPOSE IN THE FACE OF THE HUGE DEFICITS THE JOHNSON ADMINIS-
TRATION IS PILING UP. IF THE ECONOMY IS WEAK, THE PRESIDENT
CAN SIMPLY SIT BY WHILE HIS TAX PROPOSAL RECEIVES
CONGRESSIONAL BURIAL
GERALD
-12-
ONE FACT SHOULD NOT BE LOST SIGHT OF IN THE DEBATE OVER
A POSSIBLE TAX INCREASE.
JOHNSON ECONOMIC POLICIES HAVE PRODUCED PROJECTED
DEFICITS FOR FISCAL 1967 AND 1968 TOTALLING $18 TO $24
BILLION. JOHNSON ECONOMIC POLICIES HAVE PRODUCED INFLATION
WHICH HAS ROCKED THE PRICE STABILITY THIS COUNTRY HAS
ENJOYED AND ERODED THE VALUE OF THE DOLLAR. JOHNSON
ECONOMIC POLICIES HAVE PRODUCED THE HIGHEST INTEREST RATES
IN 40 YEARS. JOHNSON ECONOMIC POLICIES HAVE PRODUCED A
CONTINUING OUTFLOW OF OUR GOLD.
THIS IS THE MESS THIS ADMINISTRATION HAS MADE. THIS
IS THE MESS THE ADMINISTRATION NOW SEEKS TO COVER UP BY
APPEALING TO THE PURITAN ETHIC OF THE AMERICAN PEOPLE WITH
AN INCOME TAX INCREASE WHICH POSES A CALCULATED RISK FOR
LIBRARY
THE AMERICAN ECONOMY.
-13-
NOW THAT EXPERIENCE HAS PROVED THE FISCAL 1967 BUDGET
A THOROUGHLY UNRELIABLE GUIDE, IT MUST SEEM OBVIOUS TO ALL
AMERICANS THAT THIS COUNTRY DESPERATELY NEEDS BUDGETARY
HONESTY. THIS IS A CRITICAL PERIOD FOR THE ECONOMY AND
FOR OUR PEOPLE.
ARE WE GETTING HONESTY? THIS ADMINISTRATION SPEAKS
OF A "MODEST INCREASE" IN DOMESTIC SPENDING. YET FAR MORE
MONEY IS BEING PUMPED INTO GREAT SOCIETY PROGRAMS THAN THE
AMERICAN PEOPLE WERE LED TO EXPECT AFTER LAST NOVEMBER'S
ELECTION. CONTROVERSIAL ITEMS LIKE THE TEACHER CORPS AND
RENT SUBSIDIES WERE ALMOST DOUBLED IN THE BUDGET. THE
DEMONSTRATION CITIES PROGRAM IS BUDGETED AT THE HIGHEST
LEVEL ALLOWED BY LAW. NEW PROGRAMS ARE SCATTERED THROUGHOUT
THE BUDGET. IS THIS A "MODEST INCREASE" IN DOMESTIC
ERALD FORD LIBRARY
SPENDING? IS THIS THE BUDGETARY HONESTY THE TIMES DEMAND?
-14-
I AM A FIRM BELIEVER IN THE "NEW ECONOMICS." BUT AS
I SEE THE GAME, IT SHOULD OPERATE UNDER THE TWO-PLATOON
SYSTEM. WHEN THE COUNTRY IS TROUBLED WITH HIGH UNEMPLOYMENT,
THE OFFENSIVE TEAM SHOULD BE SENT IN TO STIMULATE THE
ECONOMY--THROUGH TAX CUTS, EXPENDITURE INCREASES AND FAIRLY
ABUNDANT CREDIT. WHEN INFLATIONARY PRESSURES DEVELOP AND
THE ECONOMY OVERHEATS, SEND IN THE DEFENSIVE TEAM-CURTAIL
GOVERNMENT SPENDING, TIGHTEN CREDIT, MAYBE RAISE TAXES.
WE NEEDED THE DEFENSIVE TEAM IN '66, BUT THE ADMINISTRA-
TION SENT IN ONLY A SCRUB SUBSTITUTE
AND DID THAT LATE
IN THE GAME. THEY FIGURED THE FANS MIGHT NOT LIKE THE
SHIFT IN STRATEGY. IS THIS HONESTY?
THIS COUNTRY FEELS A KEEN NEED FOR HONESTY IN GOVERNMENT.
THE NEW MOOD OF THE NATION DEMANDS IT.
GERALD
LIBRARY
-15-
THE NEW MOOD DEMANDS A NEW DIRECTION IN OUR NATIONAL
AFFAIRS--FEDERAL TAX-SHARING, GREATER RESPONSIBLITY FOR STATE
AND LOCAL GOVERNMENTS, GREATER FREEDOM AND TRUST IN THE
PEOPLE.
I CANNOT SPEAK FOR ALL MEMBERS OF CONGRESS. BUT I KNOW
THAT MY PARTY COLLEAGUES WILL WORK FOR SOUND PROGRAMS. WE
WILL INSIST UPON EFFICIENCY AND ECONOMY IN GOVERNMENT
WITHOUT SACRIFICE OF FORWARD MOVEMENT.
THERE IS A NEW BREED IN THE CONGRESS. WHILE OTHERS CALL
FOR MORE PROGRAMS, MORE TAXING, MORE SPENDING, THE NEW BREED
WILL PRESS FOR GENUINE PROGRESS
PROGRESS AT A PACE THE
PEOPLE CAN AFFORD.
GERALD
THE NATION IS STILL LOOKING FOR SOLUTIONS TO THE
PROBLEMS WE FACE ÁT HOME AND ABROAD. TO FIND THE ANSWERS,
-16-
WE MUST POINT THE COUNTRY IN THE NEW DIRECTION THE PEOPLE
ARE DEMANDING. ONLY THEN CAN WE FIND THE PATH TO TRUE
GREATNESS.
---THANK YQU---
--END--
FORD is LIBRARY GERALD
AN ADDRESS BY REP, GERALD R. FORD, R-MICH.
BEFORE THE ROANOKE JAYCEES, ROANOKE, VA.
MONDAY, JAN. 30, 1967
There is a new mood in the Nation today. It is a mood which produced a
Congress with a new complexion. This new Congress can best be described as cautious
and prudent.
As we organize to carry out our workload for 1967, members of Congress are
analyzing the Nation's new mood.
I believe congressmen from my party have taken an accurate reading of that
mood--and it is simply this: Ours is a Nation which no longer believes that the
United States can afford both guns and butter frills and ruffles along with rifles.
It seems clear to me this Administration is misreading the true mood of America.
If the President had taken the national pulse properly, he would not have submitted
to the Congress on January 24 a whopping administrative budget which calls for spend-
ing a record-breaking $135 billion in fiscal 1968.
I am not going to confuse the issue by talking about the government's national
accounts budget, which includes the trust funds. This Administration's budget
gimmickry is deceptive enough without looking at both the administrative and national
accounts budgets at the same time.
Let's concentrate on the administrative budget, the one most people are fami-
liar with, and let's begin with the fiscal year we're in now.
Last January the President said he planned to spend $112.8 billion in fiscal
year 1967 and pegged the deficit at $1.8 billion. Instead he now says he'll be
spending $14 billion more than he had anticipated--and the red ink figure will run
close to $10 billion. It's an interesting coincidence that the interest on the
national debt now totals slightly more than $14 billion a year. This is the second
largest single item in the administrative budget, the largest item after National
Defense.
This month the President dropped a $135 billion budget into Congress's lap.
It calls for an outlay $22 billions larger than the fiscal 1967 budget and $8 billion
greater than current fiscal year spending actually is proving to be.
There's another coincidence. The President is planning to spend $8 billion
more in fiscal 1968 than in the current fiscal year and is planning a deficit in
almost precisely that amount.
To hold the deficit to ONLY $8.1 billion, the President wants Congress to vote
about $6 billion in new taxes. This would include a 6 percent income tax surcharge
and an increase in postal fees.
(MORE)
-2-
The only sound reason for a tax increase in 1967 is the prospect of a huge
fiscal 1968 deficit and the damage that might result. Now let's ask ourselves why
a big deficit? Deficits result from heavy government spending, spending which exceeds
government income. Does the government have to spend far beyond its means, year
after year?
You can reduce deficits in either one of two ways. Either you cut spending
and bring it into reasonable balance with revenue, or you increase revenue. You
increase revenue by stimulating the private sector of the economy, or by increasing
tax rates and hoping the economy remains healthy enough to produce a bigger tax take.
At the same time, you should focus on the very important goal of price stability.
What is our present situation?
We blundered through the year 1966, a year that saw a major mistake in United
States economic policy. Inflation was the No. 1 problem, yet the Administration con-
tinued to stimulate the economy with increased government spending. The result--the
sharpest consumer price rises in nine years and a staggering $9.7 billion deficit.
Now the economy is sagging in many spots. The automotive industry has been
hit hard by a slump in new car sales. Just last Thursday nearly 17,000 Chrysler and
Chevrolet workers were laid off indefinitely. The homebuilding industry is just
beginning to pull itself out of a virtual depression. Major home appliances are not
selling well. Business profits, generally, are beginning to slide.
At the same time, inflationary pressures are continuing. While the demand-
pull kind of inflation we experienced in 1966 is moderating, cost-push inflation
threatens real trouble for 1967. Unions are demanding--and many of them will get--
wage increases and fringe benefits totalling between 5 and 8 percent. These new
contracts will reflect not only productivity increases but the 3.3 percent rise in
the cost of living in 1966.
These union members and all other Americans were forced to pay the high price
tags of 1966 inflation. Now the Administration proposes to add a 6 percent surcharge
to their tax bills for 1967.
As I mentioned earlier, the only sound reason for a tax increase is to reduce
a deficit or cool off an overheated economy. But the economy already is cooling off,
and the possibility of a recession in 1967 cannot be dismissed.
Should we then increase taxes to ease credit? That adjustment also is under
way. In any case, you can relax tight money pressures just as well by cutting non-
essential federal spending, thus reducing government demand for borrowed funds.
One of the tragedies of the past year is that the Administration was reticent
on fiscal matters. When it did speak out, it spoke carelessly.
(MORE)
-3-
No, I will go further than that. To be absolutely candid about it, this
Administration concealed the true cost of the Vietnam War. Those who are charitable
say the Administration "underestimated" the cost of the war by about $10 billion.
Let's call a spade a spade. Last year was an election year. Now that the
election is over, the Administration suddenly knows how much the Vietnam War is costing.
All last year the Administration was caught in a kind of election year
paralysis. The President had enunciated a butter and guns policy in his State of the
Union Message of January, 1966. He repeated that theme in his 1966 Budget Message.
This made it difficult for him to adopt the monetary and fiscal policies demanded by
rising inflation. Instead he left the country to wrestle and suffer with tight credit.
Now, suddenly, the President says we must deal with tight credit by raising
taxes.
I say we must cut spending before we even consider raising taxes.
There is fat in the President's fiscal 1968 budget. Not only that, there is
lard in the fiscal 1967 spending course the President now is following.
I urge here and now that the President clamp a sharp curb on domestic spending
in the remaining five months of this fiscal year and that he submit a revised budget
for fiscal 1968.
I feel certain the President could cut several billions out of the fiscal 1968
budget if he would set a lower ceiling on it and instruct his budget director to
squeeze overall spending under that roof.
Only then could he come to Congress and honestly say his preposed 6 percent
income tax surcharge was to pay for the Vietnam War and not for greater spending on
his Great Society schemes. In fact, he might then decide to abandon his tax increase
request.
If the President refuses to resubmit his budget, the House Appropriations
Committee could force him to do SO. All that would be necessary is for my good friend,
George Mahon of Texas, to refuse to schedule hearings on the budget by the Appropria-
tions Committee. The President then would have no choice but to revise his spending
plans and send a new budget to Mr. Mahon's committee.
We know the President's $135 billion budget is going to have to be cut. The
Budget Bureau, with its intimate knowledge of bureaucratic niches and crannies would
find it far easier to do the job than a congressional committee.
We all realize there are Johnsonian gimmicks in the President's tax increase
proposal. It would not take effect until next July 1. If the economy is strong
enough to absorb it at mid-year, the tax increase would be hard to oppose in the face
of the huge deficits the Johnson Administration is piling up. If the economy is weak,
the President can simply sit by while his tax proposal receives congressional burial.
(MORE)
-4-
One fact should not be lost sight of in the debate over a possible tax increase.
Johnson economic policies have produced projected deficits for fiscal 1967 and
1968 totalling $18 to $24 billion. Johnson economic policies have produced inflation
which has rocked the price stability this country has enjoyed and eroded the value of
the dollar. Johnson economic policies have produced the highest interest rates in
40 years. Johnson economic policies have produced a continuing dollar drain, a con-
tinuing decline in our balance of trade, and a continuing outflow of our gold.
This is the mess this Administration has made. This is the mess the Adminis-
tration now seeks to cover up by appealing to the Puritan ethic of the American
people with an income tax increase which poses a calculated risk for the American
economy.
Now that experience has proved the fiscal 1967 budget a thoroughly unreliable
guide, it must seem obvious to all Americans that this country desperately needs
budgetary honesty. This is a critical period for the economy and for our people.
Are we getting honesty? This Administration speaks of a "modest increase" in
domestic spending. Yet far more money is being pumped into Great Society programs
than the American people were led to expect after last November's election. Contro-
versial items like the Teacher Corps and Rent Subsidies were almost doubled in the
budget. The Demonstration Cities program is budgeted at the highest level allowed
by law. New programs are scattered throughout the budget. Is this a "modest increase"
in domestic spending? is this the budgetary honesty the times demand?
I am a firm believer in the "New Economics." But as I see the game, it should
operate under the two-platoon system. When the country is troubled with high
unemployment, the offensive team should be sent in to stimulate the economy--through
tax cuts, expenditure increases and fairly abundant credit. When inflationary
pressures develop and the economy overheats, send in the defensive team--curtail
government spending, tighten credit, maybe raise taxes.
We needed the defensive team in '66, but the Administration sent in only a scrub
substitute and did that late in the game. They figured the fans might not like
the shift in strategy. Is this honesty?
This country feels a keen need for honesty in government. The New Mood of the
Nation demands it.
The New Mood demands a New Direction in our national affairs--federal tax-
sharing, greater responsibility for state and local governments, greater freedom and
trust in the people.
I cannot speak for all members of Congress. But I know that my party
colleagues will work for sound programs. We will insist upon efficiency and economy
(MORE)
-5-
in government without sacrifice of forward movement.
There is a New Breed in the Congress. While others call for more programs,
more taxing, more spending, the New Breed will press for genuine progress progress
at a pace the people can afford.
The Nation is still looking for solutions to the problems we face at home and
abroad. To find the answers, we must point the country in the New Direction the
people now are demanding. Only then can we find the path to true greatness.
Thank you
# # #
FOR RELEASE AT 6:30 P.M., January 30, 1967
AN ADDRESS BY REP. GERALD R. FORD, R-MICH.
BEFORE THE ROANOKE JAYCEES, ROANOKE, VA.
MONDAY, JAN. 30, 1967
There is a new mood in the Nation today. It is a mood which produced a
Congress with a new complexion. This new Congress can best be described as cautious
and prudent.
As we organize to carry out our workload for 1967, members of Congress are
analyzing the Nation's new mood.
I believe congressmen from my party have taken an accurate reading of that
mood--and it is simply this: Ours is a Nation which no longer believes that the
United States can afford both guns and butter frills and ruffles along with rifles.
It seems clear to me this Administration is misreading the true mood of America.
If the President had taken the national pulse properly, he would not have submitted
to the Congress on January 24 a whopping administrative budget which calls for spend-
ing a record-breaking $135 billion in fiscal 1968.
I am not going to confuse the issue by talking about the government's national
accounts budget, which includes the trust funds. This Administration's budget
gimmickry is deceptive enough without looking at both the administrative and national
accounts budgets at the same time.
Let's concentrate on the administrative budget, the one most people are fami-
liar with, and let's begin with the fiscal year we're in now.
Last January the President said he planned to spend $112.8 billion in fiscal
year 1967 and pegged the deficit at $1.8 billion. Instead he now says he'll be
spending $14 billion more than he had anticipated--and the red ink figure will run
close to $10 billion. It's an interesting coincidence that the interest on the
national debt now totals slightly more than $14 billion a year. This is the second
largest single item in the administrative budget, the largest item after National
Defense.
This month the President dropped a $135 billion budget into Congress's lap.
It calls for an outlay $22 billions larger than the fiscal 1967 budget and $8 billion
greater than current fiscal year spending actually is proving to be.
There's another coincidence. The President is planning to spend $8 billion
more in fiscal 1968 than in the current fiscal year and is planning a deficit in
almost precisely that amount.
To hold the deficit to ONLY $8.1 billion, the President wants Congress to vote
about $6 billion in new taxes. This would include a 6 percent income tax surcharge
and an increase in postal fees.
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The only sound reason for a tax increase in 1967 is the prospect of a huge
fiscal 1968 deficit and the damage that might result. Now let's ask ourselves why
a big deficit? Deficits result from heavy government spending, spending which exceeds
government income. Does the government have to spend far beyond its means, year
after year?
You can reduce deficits in either one of two ways. Either you cut spending
and bring it into reasonable balance with revenue, or you increase revenue. You
increase revenue by stimulating the private sector of the economy, or by increasing
tax rates and hoping the economy remains healthy enough to produce a bigger tax take.
At the same time, you should focus on the very important goal of price stability.
What is our present situation?
We blundered through the year 1966, a year that saw a major mistake in United
States economic policy. Inflation was the No. 1 problem, yet the Administration con-
tinued to stimulate the economy with increased government spending. The result--the
sharpest consumer price rises in nine years and a staggering $9.7 billion deficit.
Now the economy is sagging in many spots. The automotive industry has been
hit hard by a slump in new car sales. Just last Thursday nearly 17,000 Chrysler and
Chevrolet workers were laid off indefinitely. The homebuilding industry is just
beginning to pull itself out of a virtual depression. Major home appliances are not
selling well. Business profits, generally, are beginning to slide.
At the same time, inflationary pressures are continuing. While the demand-
pull kind of inflation we experienced in 1966 is moderating, cost-push inflation
threatens real trouble for 1967. Unions are demanding--and many of them will get--
wage increases and fringe benefits totalling between 5 and 8 percent. These new
contracts will reflect not only productivity increases but the 3.3 percent rise in
the cost of living in 1966.
These union members and all other Americans were forced to pay the high price
tags of 1966 inflation. Now the Administration proposes to add a 6 percent surcharge
to their tax bills for 1967.
As I mentioned earlier, the only sound reason for a tax increase is to reduce
a deficit or cool off an overheated economy. But the economy already is cooling off,
and the possibility of a recession in 1967 cannot be dismissed.
Should we then increase taxes to ease credit? That adjustment also is under
way. In any case, you can relax tight money pressures just as well by cutting non-
essential federal spending, thus reducing government demand for borrowed funds.
One of the tragedies of the past year is that the Administration was reticent
on fiscal matters. When it did speak out, it spoke carelessly.
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No, I will go further than that. To be absolutely candid about it, this
Administration concealed the true cost of the Vietnam War. Those who are charitable
say the Administration "underestimated" the cost of the war by about $10 billion.
Let's call a spade a spade. Last year was an election year. Now that the
election is over, the Administration suddenly knows how much the Vietnam War is costing.
All last year the Administration was caught in a kind of election year
paralysis. The President had enunciated a butter and guns policy in his State of the
Union Message of January, 1966. He repeated that theme in his 1966 Budget Message.
This made it difficult for him to adopt the monetary and fiscal policies demanded by
rising inflation. Instead he left the country to wrestle and suffer with tight credit.
Now, suddenly, the President says we must deal with tight credit by raising
taxes.
I say we must cut spending before we even consider raising taxes.
There is fat in the President's fiscal 1968 budget. Not only that, there is
lard in the fiscal 1967 spending course the President now is following.
I urge here and now that the President clamp a sharp curb on domestic spending
in the remaining five months of this fiscal year and that he submit a revised budget
for fiscal 1968.
I feel certain the President could cut several billions out of the fiscal 1968
budget if he would set a lower ceiling on it and instruct his budget director to
squeeze overall spending under that roof.
Only then could he come to Congress and honestly say his proposed 6 percent
income tax surcharge was to pay for the Vietnam War and not for greater spending on
his Great Society schemes. In fact, he might then decide to abandon his tax increase
request.
If the President refuses to resubmit his budget, the House Appropriations
Committee could force him to do SO. All that would be necessary is for my good friend,
George Mahon of Texas, to refuse to schedule hearings on the budget by the Appropria-
tions Committee. The President then would have no choice but to revise his spending
plans and send a new budget to Mr. Mahon's committee.
We know the President's $135 billion budget is going to have to be cut. The
Budget Bureau, with its intimate knowledge of bureaucratic niches and crannies would
find it far easier to do the job than a congressional committee.
We all realize there are Johnsonian gimmicks in the President's tax increase
proposal. It would not take effect until next July 1. If the economy is strong
enough to absorb it at mid-year, the tax increase would be hard to oppose in the face
of the huge deficits the Johnson Administration is piling up. If the economy is weak,
the President can simply sit by while his tax proposal receives congressional burial.
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One fact should not be lost sight of in the debate over a possible tax increase.
Johnson economic policies have produced projected deficits for fiscal 1967 and
1968 totalling $18 to $24 billion. Johnson economic policies have produced inflation
which has rocked the price stability this country has enjoyed and eroded the value of
the dollar. Johnson economic policies have produced the highest interest rates in
40 years. Johnson economic policies have produced a continuing dollar drain, a con-
tinuing decline in our balance of trade, and a continuing outflow of our gold.
This is the mess this Administration has made. This is the mess the Adminis-
tration now seeks to cover up by appealing to the Puritan ethic of the American
people with an income tax increase which poses a calculated risk for the American
economy.
Now that experience has proved the fiscal 1967 budget a thoroughly unreliable
guide, it must seem obvious to all Americans that this country desperately needs
budgetary honesty. This is a critical period for the economy and for our people.
Are we getting honesty? This Administration speaks of a "modest increase" in
domestic spending. Yet far more money is being pumped into Great Society programs
than the American people were led to expect after last November's election. Contro-
versial items like the Teacher Corps and Rent Subsidies were almost doubled in the
budget. The Demonstration Cities program is budgeted at the highest level allowed
by law. New programs are scattered throughout the budget. Is this a "modest increase"
in domestic spending? is this the budgetary honesty the times demand?
I am a firm believer in the "New Economics." But as I see the game, it should
operate under the two-platoon system. When the country is troubled with high
unemployment, the offensive team should be sent in to stimulate the economy--through
tax cuts, expenditure increases and fairly abundant credit. When inflationary
pressures develop and the economy overheats, send in the defensive team--curtail
government spending, tighten credit, maybe raise taxes.
We needed the defensive team in '66, but the Administration sent in only a scrub
substitute and did that late in the game. They figured the fans might not like
the shift in strategy. Is this honesty?
This country feels a keen need for honesty in government. The New Mood of the
Nation demands it.
The New Mood demands a New Direction in our national affairs--federal tax-
sharing, greater responsibility for state and local governments, greater freedom and
trust in the people.
I cannot speak for all members of Congress. But I know that my party
colleagues will work for sound programs. We will insist upon efficiency and economy
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in government without sacrifice of forward movement.
There is a New Breed in the Congress. While others call for more programs,
more taxing, more spending, the New Breed will press for genuine progress progress
at a pace the people can afford.
The Nation is still looking for solutions to the problems we face at home and
abroad. To find the answers, we must point the country in the New Direction the
people now are demanding. Only then can we find the path to true greatness.
Thank you---
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