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New Jersey Building Contractors Association, Newark, NJ, February 22, 1967
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New Jersey Building Contractors Association, Newark, NJ, February 22, 1967
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Gerald R. Ford Congressional Papers
Speeches
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Economics
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Great Society
Inflation (Finance)
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Vietnam War, 1961-1975
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The original documents are located in Box D21, folder "New Jersey Building Contractors
Association, Newark, NJ, February 22, 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States of America his copyrights in all of his unpublished writings in National Archives collections.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
SPEECH BEFORE THE NEW JERSEY BUILDING CONTRACTORS, NEWARK, N.J.
WED., FEB. 22, 1967
LADIES AND GENTLEMEN:
TONIGHT I AM INVITING YOU TO TOUR WITH ME THE PUZZLING
CITY OF WASHINGTON, D. C.
I CALL IT THE PUZZLING CITY NOT MERELY BECAUSE THE
FRENCHMAN WHO LAID OUT ITS STREET PATTERN HAD 'A THING'
ABOUT TRAFFIC CIRCLES, WITH STREETS FANNING OUT LIKE SPOKES
FROM THE HUB OF A WHEEL.
WASHINGTON IS A PUZZLING CITY BECAUSE IT IS A CITY OF
GAPS, A CITY HERE THE GAP BETWEEN DREAMS AND REALITY IS
MOST ACUTE, A CITY WHERE THE GAP BETWEEN RHETORIC AND REAL ITY
OFTEN IS MOST PAINFUL, A CITY WHERE ILLUSION OFTEN PASSES
LIBRARY
FOR TRUTH.
-2-
AT NO TIME HAS THE CITY OF WASHINGTON BEEN MORE PUZZLING
partically
THAN DURING THE PAST THREE YEARS
AND AT PRESENT.
IT HAS BEEN SO PUZZLING THAT EVEN THE MOST CASUAL
OBSERVER OF CURRENT EVENTS IS FAMILIAR WITH THE TERM,
CREDIBILITY GAP. MOST AMERICANS ASSOCIATE THAT TERM WITH
THE EQUALLY POPULAR EXPRESSION "WOULD YOU BELIEVE?"
AND THEIR ANSWER IS "NO."
WITH THE PUBLICITY GENERATED BY THE ADAM CLAYTON POWELL,
THOMAS DODD AND BOBBY BAKER CASES, THE AMERICAN PUBLIC ALSO
IS BEGINNING TO SEE AN INTEGRITY GAP IN WASHINGTON.
UNFORTUNATELY, THEY TEND TO TAR ALL MEMBERS OF CONGRESS
WITH THE SAME BRUSH. THIS IS TRAGIC BECAUSE I FIRMLY
BELIEVE THE OVERWHELMING MAJORITY OF MEMBERS OF THE CONGRESS
--DEMOCRATS AND REPUBLICANS--ARE HONEST, HARDWORKING AND
IBRARY
ABLE PUBLIC OFFICIALS.
-3-
WHAT ALL OF THIS ADDS UP TO IS THAT IT'S CLEANUP TIME
IN WASHINGTON. IT'S NOT FIXIT TIME; IT'S FIXUP TIME.
WE HAVE TO CLEAN HOUSE - - AND THE SOONER THE BETTER.
I'M NOT JUST TALKING ABOUT ABUSES OF THE PUBLIC TRUST;
I'M TALKING ABOUT ABUSES OF THE PUBLIC PURSE.
very specifically
I'M NOT JUST TALKING ABOUT AIRPLANE TRIPS ON PRIVATE
BUSINESS AT TAXPAYER EXPENSE; I'M TALKING ABOUT FOOLISH
FUNDING, SILLY SPENDING OF TAXPAYER MONEY IN THE NAME OF
THE PUBLIC INTEREST.
I'M TALKING ABOUT MILLIONS OF DOLLARS SPENT ON SOCIAL
EXPERIMENTATION WHILE THERE'S A WAR ON. I'M TALKING ABOUT
MILLIONS OF DOLLARS SPENT ON BEAUTIFYING AMERICA WHILE THE
NUMBER OF GI'S KILLED OR WOUNDED PASSES THE 50,000 MARK IN
A WAR COSTING US NEARLY $2 BILLION A MONTH.
GERALD
LIBRARY
-4-
several
LET ME GIVE YOU COUPLE OF EXAMPLES:
I HEARD THE OTHER DAY ABOUT A HALF-MILLION-DOLLAR
HEALTH-EDUCATION-WELFARE DEPARTMENT PROJECT TO DEVELOP
A DANCE AND THEATER CURRICULUM. SO I CHECKED INTO IT.
A U. S. OFFICE OF EDUCATION OFFICIAL TOLD ME THE $500,000
IS BEING SPENT THIS FISCAL YEAR UNDER TITLES 3 AND 4 OF THE
ELEMENTARY-SECONDARY EDUCATION ACT. THAT'S FEDERAL AID TO
ELEMENTARY SCHOOLS AND HIGH SCHOOLS under registation approved for
the first time in 1965 under The late, unlamented 89th Engreos,
THE MONEY HAS BEEN USED TO ESTABLISH LABORATORY THEATERS
IN PROVIDENCE, R.I., AND NEW ORLEANS, LA. THE IDEA IS
TO FIND OUT HOW WE MIGHT BE ABLE TO USE THE ARTS TO TEACH
YOUNGSTERS WHO CAN'T LEARN FROM BOOKS.
AS THE OFFICE OF EDUCATION OFFICIAL EXPLAINED IT,
FORD LIBRARA
"WE'RE TRYING TO SEE WHAT THE ARTS CAN DO TO MEET NATIONAL
NEEDS."
-5-
CAN YOU SEE SPENDING HALF A MILLION DOLLARS IN EDUCATIONAL
THEATER WORKSHOPS WHILE THERE'S A WAR ON? I CAN'T, HOWEVER
or academically
LOFTILY IT IS DESCRIBED.
such expendentures do not
IT DOESN'T MAKE SENSE WHEN WE SHOULD BE SETTING PRIORITIES
AND CUTTING OUT ALL BUT THE MOST ESSENTIAL DOMESTIC SPENDING.
?
breat Society
isdescribedas
I LEARNED, TOO, ABOUT ANOTHER/PROJECT THAT SHOULD BE
MOST HELP
THIS NATION
MEET
ITS NATIONAL NEEDS.
THE HOUSING AND URBAN DEVELOPMENT DEPARTMENT HAS JUST
APPROVED A $452,375 GRANT TO THE DISTRICT OF COLUMBIA FOR
A NUMBER OF BEAUTIFICATION PROJECTS. INCLUDING THIS
$452, 000 GRANT, THE D. C. GOVERNMENT PLANS TO SPEND MORE
THAN $2 MILLION ON BEAUTIFICATION THIS FISCAL YEAR.
GENERAL FORD VIBRARY
IDEALLY, BEAUTY SHOULD BE PRESENT IN EVERYONE'S LIFE.
IDEALLY, THE CITY OF WASHINGTON SHOULD BE THE MOST BEAUTIFUL
-6-
CITY IN THE WORLD. BUT DOES IT MAKE SENSE TO DROP A $452,000
federal BEAUTIFICATION GRANT INTO THE LAP OF D. C. OFFICIALS WHEN
WE'RE FIGHTING A COSTLY WAR HALFWAY AROUND THE WORLD? I
THINK NOT.
SPENDING AND THEN TELL ME WHETHER THE PRESIDENT HAS BEEN alequelly
THINK ABOUT THESE TWO EXAMPLES OF JOHNSON ADMINISTRATION
BLOCKING UNNECESSARY EXPENDITURES AS HE LIKES TO PRETEND
only peopless -
CONSIDER THESE TWO ITEMS AND TELL ME WHETHER YOU THINK
CONGRESS SHOULD GIVE THE PRESIDENT HIS INCOME TAX INCREASE
OR CUT HIS FISCAL 1968 BUDGET. YOU AND I BOTH KNOW THERE
ARE MANY MORE ITEMS LIKE THESE TWO SCATTERED THROUGHOUT
THE MAMMOTH DOCUMENT THAT PASSES FOR A GUIDE TO REASONABLE
FEDERAL SPENDING.
BERALD FORD LIBRARY
THE PRESIDENT'S $135 BILLION FISCAL 1968 BUDGET NOT ONLY
-7-
IS FAT.
(HERE HOLD UP THE BUDGET
BUT IT HAS PLENTY OF FAT IN IT.
WE IN THE CONGRESS WHO
CARE ABOUT THE TAXPAYER INTEND TO CUT OUT AS MUCH OF IT
AS WE CAN. WE KNOW WE CAN DO IT WITHOUT CUTTING NECESSARY
The budget surget
SERVICES. WE KNOW THE PEOPLE WANT # DONE either with a scalpel n
1
a meat are,
IS THIS A NEGATIVE ATTITUDE? IS IT NEGATIVE TO_WANT
TO STREAMLINE THE FEDERAL GOVERNMENT, SET PRIORITIES AND
SPEND THE TAXPAYER'S DOLLARS PRUDENTLY? I CONTEND THAT sucha
IS BEING POSITIVE--AND IN THE BEST POSSIBLE WAY. THOSE
policy
WHO RAISE THEIR HANDS IN HORROR OVER ANY ATTEMPTS AT
BUDGET-CUTTING SHOULD BE CONSIGNED TO CREDIBILITY GAP,
OR BETTER YET LET'S DROP THEM INTO CREDIBILITY CANYON.
THE CREDIBILITY GAP HAS WIDENED INTO A CANYON, YOU KNOW
AND FOR GOOD REASON.
FORD NEBRARY
-8-
A SHORT TIME AGO DEFENSE DEPARTMENT OFFICIALS ADMITTED
THAT OUR PLANE LOSSES IN VIETNAM ARE ACTUALLY DOUBLE WHAT
THEY HAD BEEN REPORTING
BECAUSE THEY HAD BEEN GIVING OUT
FIGURES ONLY ON THOSE PLANES LOST IN AIR ACTION IGNORING,
AS FAR AS THE PUBLIC WAS CONCERNED, THOSE DESTROYED OTHER
THAN IN COMBAT. THERE'S ACCURACY FOR YOU; THERE'S
TRUTH-IN-REPORTING FOR YOU!
THE CREDIBILITY GAP NOT ONLY EXTENDS TO THE BUDGET;
IT'S this gap THERE between THAT factor IT IS and THE fection WIDEST. is The widest at this print, department in This area, in this
asan epample
TAKE THE PRESIDENT'S BUDGET FOR THE CURRENT FISCAL YEAR,
FOR INSTANCE. WHEN THE PRESIDENT SUBMITTED IT TO CONGRESS,
HE SAID WE'D HAVE A $1.8 BILLION DEFICIT. REPUBLICANS SAID
THE FIGURE WAS A PHONEY. THE ADMINISTRATION CRIED, "POLITICS."
this same
NOW THE PRESIDENT TELLS US THE 1967 DEFICIT WILL BE MORE
LIBRARY
-9-
mene
THAN $9 BILLION. THIS ERROR RESULTED FROM A, MISCALCULATION
OF $14 BILLION IN EXPENDITURES, AND THIS GROSS UNDERESTIMATE
OF EXPENDITURES WAS NOT ALL RELATED TO INCREASED COSTS
IN VIETNAM.
we
ALL LAST YEAR REPUBLICANS SAID THE ADMINISTRATION WAS
HANDING OUT FAKE FIGURES ON THE COST OF THE VIETNAM WAR.
CIVILIAN SPOKESMEN FOR THE PENTAGON SNORTED, "POLITICS."
NOW DEFENSE SECRETARY MCNAMARA ADMITS HE UNDERESTIMATED
THE COST OF THE WAR BY $10 BILLION.
AT THE SAME TIME THAT ADMINISTRATION OFFICIALS WERE
REFUSING TO MAKE KNOWN THE TRUE COST OF THE VIETNAM WAR,
THEY WERE RAMMING THROUGH CONGRESS SUCH NEW PROGRAMS AS
RENT SUBSIDIES, THE TEACHER CORPS AND MANY OTHER GREAT
SOCIETY FRINGE BENEFITS.
FORD LIBRARY
-10-
ALL THIS TIME PRICES WERE MOVING UP AND THE PRICE
STABILITY THAT HAD MEANT REAL ECONOMIC GAINS FOR MILLIONS
OF AMERICANS WAS BEING DESTROYED.
PRESIDENT JOHNSON REJECTED THE RECOMMENDATION OF HIS
TOP ECONOMIC ADVISER, GARDNER ACKLEY, THAT HE ASK CONGRESS
TO VOTE AN INCOME TAX INCREASE. IN THE ALTERNATIVE, HE
ALSO REJECTED ALL REPUBLICAN PLEAS THAT HE MAKE DEEP CUTS
IN DOMESTIC SPENDING AS OFFSETS TO VIETNAM WAR COSTS.
inevitable
THE RESULT WAS THAT OUR OVERHEATED ECONOMY ROLLED
BLINDLY ON, STIMULATED BY HEAVY GREAT SOCIETY SPENDING
AND SLOWED DOWN ONLY SLIGHTLY BY SUCH DEVICES AS ACCELERATED
COLLECTION OF INCOME TAXES AND RESTORATION OF PART OF THE
GRD
EXCISE TAXES REPEALED IN 1965.
OF COURSE, WE HAD TO INCREASE THE NATIONAL DEBT LIMIT
-11-
FROM $330 BILLION TO $336 BILLION RECENTLY. AND CONGRESS
WILL BE ASKED TO RAISE THE DEBT LIMIT AGAIN IN JUNE BY
ABOUT $10 BILLION MORE. IS THIS ONLY BECAUSE OF THE
VIETNAM WAR? NOT AT ALL! WE CAN ALSO THANK UNPRECEDENTED
DOMESTIC SPENDING TO EXPAND THE SO-CALLED GREAT SOCIETY
AND TACKLE MORE COSTLY SOCIAL EXPERIMENTS.
IS THIS TRULY THE WAY TO FASHION A GREAT SOCIETY IN
AMERICA? TO LADLE OUT MILLIONS OF TAXPAYER DOLLARS FOR
COUNTLESS EXPERIMENTS OF DUBIOUS VALUE WHILE OVER 400,000
AMERICAN MILITARY PERSONNEL COMMITTED TO VIETNAM BY THE
COMMANDER-IN-CHIEF ARE ENGAGED IN THE THIRD LARGEST WAR
IN OUR HISTORY?
FORD & LIBRARY GERALD
WE WANT PROGRESS IN THIS COUNTRY, BUT THIS ISN'T THE
basic
dead
WAY TO GET IT. THE 7 APPROACH IS WRONG. IT'S, WRONG BECAUSE
IT'S BASED ON THE ASSUMPTION THAT ALL YOU HAVE TO DO IS
-12-
THROW ENOUGH FEDERAL DOLLARS AT A PROBLEM AND IT WILL GO
AWAY. IT'S WRONG BECAUSE IT'S BASED ON THE PREMISE THAT
ONLY WASHINGTON HAS THE ANSWERS.
WE WOULD COME UP WITH MORE OF THE ANSWERS AND WE WOULD
MOVE FASTER AND FARTHER IF WE HAD CONFIDENCE IN OUR STATE
AND LOCAL GOVERNMENTS AND IN PRIVATE ENTERPRISE. IT IS A
fatal MISTAKE TO LOOK EVERLASTINGLY TO THE FEDERAL GOVERNMENT.
I HAVE CALLED WASHINGTON A PUZZLING CITY. LET ME TELL
well intentroned, dedicated
YOU, IT IS ESPECIALLY PUZZLING TO THE 1 CITY OFFICIALS WHO
TRY TO FIND THEIR WAY THROUGH THE MAZE OF FEDERAL BUREAUS
TO TRACK DOWN A FEDERAL GRANT FOR A LOCAL PROJECT.
THE TRADITIONAL FEDERAL GRANT-IN-AID SYSTEM IS WASTEFUL.
IT IS WASTEFUL OF TIME, MONEY AND HUMAN RESOURCES. AND
IT MAKES OUR STATE AND CITY GOVERNMENTS MERE APPENDAGES
GERALO, FORD LIBRARY
-13-
OF WASHINGTON, JIGGLED BY STRINGS PULLED IN THE NATION'S
CAPITAL.
I PREDICT THAT CONGRESS IN TIME WILL ADOPT A FEDERAL
TAX-SHARING SYSTEM WHICH ULTIMATELY WILL REPLACE THE
BOGGED-DOWN BUREAUCRATIC GRANT-IN-AID SYSTEM. AND LAY DOWN form
Federal tor sharing no a systitute
the net expistry
A CHALLENGE TO OUR STATE AND LOCAL GOVERNMENTS TO DO A JOB
"p
will
IN SOLVING THEIR PROBLEMS.
AS FEDERAL GRANT PROGRAMS EXPAND AND INCREASE IN NUMBER,
THE FEDERAL TAX LOAD GROWS GREATER AND THE RED INK RISES
HIGHER. The years ago grant in and programs were to billing - this year
B/5 billion. 2n his new budget the President wants 42. lither more or #17 billin.
WE SHOULD BE MANAGING OUR NATIONAL AFFAIRS IN SUCH A
WAY THAT INCOME TAXES COULD BE REDUCED. TAX REDUCTION
SHOULD BE OUR GOAL. INSTEAD WE HAVE THE PRESIDENT ASKING
FOR AN INCREASE IN INCOME TAXES TO PAY FOR INCREASED
-14-
DOMESTIC SPENDING. IT WOULD MAKE FAR MORE SENSE TO CUT
DOMESTIC SPENDING BY AN EQUIVALENT AMOUNT.
NOW WE HAVE MR. ACKLEY, CHAIRMAN OF THE PRESIDENT'S
COUNCIL OF ECONOMIC ADVISERS, ATTEMPTING TO BLACKMAIL
CONGRESS INTO APPROVING THE PRESIDENT'S PROPOSAL FOR A
5 PERCENT SURTAX. IF THE TAX INCREASE IS NOT APPROVED,
MR. ACKLEY SAID THE OTHER DAY, "WE MIGHT FACE THE DANGER
OF A RETURN TO THE INFLATIONARY DANGERS AND HIGH INTEREST
RATES OF LAST YEAR."
MY ANSWER TO THAT IS THAT THE TAX INCREASE WILL NOT
PREVENT THE UNIONS FROM SEEKING WAGE INCREASES OF 5 PERCENT
OR MORE THIS YEAR. THE OUTLOOK IS FOR CONSIDERABLE COST-
PUSH INFLATION DUE TO WAGE INCREASES REGARDLESS OF WHAT F OWE
DO ON TAXES. AS FOR HIGH INTEREST RATES, THE ADMINISTRATION
-15-
COULD HELP THAT SITUATION BY GETTING OUT OF THE SHORT-TERM
MONEY MARKET FOR AS LONG AS POSSIBLE. Republicans a few weeks ago
offered a solution but were defeated by a missure administration effort
YOU AND I KNOW IT WAS TIGHT MONEY AND HIGH INTEREST
RATES THAT PRODUCED A VIRTUAL DEPRESSION IN THE HOME
BUILDING INDUSTRY LAST YEAR. YOU AND I KNOW THE ADMINISTRA-
TION MOVED TO SUSPEND THE 7 PERCENT TAX CREDIT FOR INVESTMENT
IN NEW PLANT AND BUILDINGS BECAUSE THAT WAS ONE WAY TO
ATTACK INFLATION WITHOUT GETTING ANYBODY BUT BUSINESS MAD.
TIGHT MONEY? HIGH INTEREST RATES? THE HARD FACTS ARE
THAT GOVERNMENT SPENDING HAS BEEN AND CONTINUES TO BE A
MAJOR REASON FOR THE RECORD DEMAND FOR MONEY AND FOR THE
INFLATIONARY PRESSURES THAT PLAGUE OUR ECONOMY. AND THIS
IS NOT JUST BECAUSE OF THE VIETNAM WAR. THE RECORD SHOWS
THAT NONDEFENSE SPENDING HAS BEEN RISING NEARLY AS MUCH.
LIBRARY
In the last Air years mon difense spending has misen both in than % mitting of dollars more
-16-
WE SHOULD BE PROMOTING GROWTH IN THE ECONOMY--HEALTHY
GROWTH. TO DO THAT WE MUST ACHIEVE A BALANCED FISCAL AND
MONETARY POLICY. AS A FIRST STEP TOWARD FISCAL BALANCE,
WE MUST PUT A HOLD ON ALL NEW FEDERAL PROGRAMS UNTIL CURRENT
INFLATIONARY PRESSURES EASE OFF.
IT IS A SEEMING PARADOX, BUT WE ARE ENCOUNTERING RECESSION
DANGERS EVEN WHILE INFLATIONARY PRESSURES CONTINUE. THIS
IS BECAUSE THE ADMINISTRATION HAS DONE SUCH A POOR JOB OF
MANAGING THE ECONOMY EVER SINCE THE MASSIVE TAX CUTS OF
1964 AND 1965 TOUCHED OFF STRONG ECONOMIC GROWTH. THERE
IS DRAG AND SAG IN THE ECONOMY RIGHT NOW. WE NEED SOUND
NEW ECONOMIC GROWTH. I DON'T THINK. A FEDERAL INCOME TAX
not
INCREASE AT MID-YEAR IS, THE WAY TO ENCOURAGE IT. WHAT
WE NEED IS A HOLDDOWN ON FEDERAL SPENDING AS A COUNTER
TO INFLATION AND HIGH INTEREST RATES--AND RESTORATION
-17-
OF THE INVESTMENT TAX CREDIT TO SPUR CAPITAL INVESTMENT,
GENERATE NEW BUSINESS CONFIDENCE AND PUT MORE PEOPLE TO WORK.
ACCORDING TO PRESIDENT JOHNSON'S AIDES, THE PRESIDENT
BELIEVES THE BEST POLITICS IS THE BEST ECONOMICS. I BELIEVE
JUST AS FIRMLY THAT THE BEST ECONOMICS IS THE BEST POLITICS.
I WANT FEDERAL SPENDING REDUCED FOR EXACTLY THAT REASON
--BECAUSE IT'S THE BEST ECONOMICS. GOVERNMENT DOESN'T
PRODUCE ANYTHING BUT SERVICES. AND IT CAN'T GIVE YOU
ANYTHING IT DOESN'T TAKE FROM YOU IN THE FIRST PLACE.
agreement big enough the
WHEN GOVERNMENT TAKES TOO MUCH FROM THE PRIVATE SECTOR
OF THE ECONOMY, GOVERNMENT JOB-TRAINING AND ANTI-POVERTY
PROGRAMS ARE OF NO AVAIL. THE BEST ANSWER TO POVERTY IS
A GOOD PAYING JOB, AND THE BEST WAY TO CREATE JOBS IS
GERALD LIBRARY GERALDR. FORD
TO ENCOURAGE SOUND GROWTH IN THE ECONOMY. LET'S HELP
-18-
OUR GREAT PRIVATE ENTERPRISE SYSTEM LICK POVERTY BY
CREATING JOBS AND TRAINING THE MEN TO FILL THEM.
TO RELY TOO HEAVILY ON GOVERNMENT IS TO INVITE
DESTRUCTION OF THAT SPIRIT IN AMERICANS WHICH PRODUCED
THE GREATEST DEMOCRACY ON EARTH, IMPERFECT AS IT IS. IT
BRINGS ON WHAT I CALL THE DISINCENTIVE SICKNESS.
IT WAS GEORGE WASHINGTON, WHOSE BIRTHDAY WE CELEBRATE
TODAY, WHO SAID: "GOVERNMENT IS LIKE A FIRE WHICH, IF
IT IS PROPERLY CONTROLLED, WILL LIGHT YOUR HOMES AND COOK
YOUR FOOD AND RUN YOUR FACTORIES BUT, IF IT IS NOT CONTROLLED
IT WILL DESTROY YOU."
PRESIDENT WOODROW WILSON, A DEMOCRAT, TOLD THE AMERICAN
PEOPLE: "LIBERTY CANNOT EXIST WHERE GOVERNMENT TAKES CARE
OF THE PEOPLE, BUT IT CAN ONLY THRIVE WHERE THE PEOPLE
LIBRARY
-19-
TAKE CARE OF THE GOVERNMENT."
I URGE YOU, EVERY ONE OF YOU, TO DO YOUR UTMOST TO
FEED THE FIRE OF LIBERTY--TO MAKE SURE THAT GOVERNMENT
IN AMERICA WILL BE THE SERVANT AND NOT THE MASTER OF THE
PEOPLE.
THANK YOU.
----
---END---
FORD LIBRANA
TEXT
NEWARK, N.J. FEB. 22, 1967
HOUSE OFFICE OF OF REPRESENTATIVES, THE MINORITY LEADER U.S. BUILDING CONTRACTORS Herald R. Ford
PUBLIC DOCUMENT
M.C.
OFFICIAL BUSINESS
WED., FEB. 22, 1967
READING Copy
N.J. BUILDING CONTRACTORS ASSN.
NEWARK, N.J.
FORD LIBRAR 07%
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FORD 3 LIBRARY 077578
FOR RELEASE AT 6:30 PsMo, WEDNESDAY, FEBRUARY 22, 1967
ADDRESS BY REP. GERALD R. FORD, R-MICH.
BEFORE THE NEW JERSEY BUILDING CONTRACTORS ASSN. NEWARK, NEW JERSEY.
Tonight I am inviting you to tour with me the puzzling city of Washington, D.C.
I call it the puzzling city not merely because the Frenchman who laid out its
street pattern had 'a thing' about traffic circles, with streets fanning out like
spokes from the hub of a wheel.
Washington is a puzzling city because it is a city of gaps, a city where the
gap between dreams and reality is most acute, a city where the gap between rhetoric
and reality often is most painful, a city where illusion often passes for truth.
At no time has the city of Washington been more puzzling than during the past
three years, and at present.
It has been so puzzling that even the most casual observer of current events
is familiar with the term, Credibility Gap. Most Americans associate that term
with the equally popular expression. "Would you believe?" And their answer is "no."
With the publicity generated by the Adam Clayton Powell, Thomas Dodd, and Bobby
Baker cases, the American public also is beginning to see an Integrity Gap in
Washington. Unfortunately, they tead to tar all members Congress with the same
brush. This is tragic because I firmly believe the overwhelming majority of members
of the Congress--Democrats and Republicans --are honest, hardworking and able public
officials.
What all of this adds up to is that it's cleanup time in Washington. It's not
fixit time; it's fixup time. We have to clean house--and the sooner the better.
I'm not just talking about abuses of the public trust; I'm talking about
abuses of the public purse.
I'm not just talking about airplane trips on private business at taxpayer
expense; I'm talking about foolish funding, silly spending of taxpayer money in
the name of the public interest.
I'm talking about millions of dollars spent on social experimentation while
there's a war on. I'm talking about millions of dollars spent on beautifying
America while the number of GI's killed or wounded passes the 50,000 mark in a
war costing us nearly $2 billion a month.
Let me give you a couple of examples.
I heard the other day about a half-million-dollar Health-Education-Welfare
Department project to develop a dance and theater curriculum. So I checked into it.
(MORE)
GERALD FORD LIBRARY
-2-
A U.S. Office of Education official told me the $500,000 is being spent this fiscal
year under Titles 3 and 4 of the Elementary-Secondary Education Act. That's federal
aid to elementary schools and high schools.
The money has been used to establish laboratory theaters in Providence, R.I.,
and New Orleans, La. The idea is to find out how we might be able to use the arts
to teach youngsters who can't learn from books.
As the Office of Education official explained it, "We're trying to see what
the arts can do to meet national needs."
Can you see spending half a million dollars in educational theater workshops
while there's a war on? I can't, however bftily it is described.
It doesn't make sense when we should be setting priorities and cutting out
all but the most essential domestic spending.
I learned, too, about another project that should be most helpful to this
nation in meeting its national needs. The Housing and Urban Development Department
has just approved a $452,375 grant to the District of Columbia for a number of
beautification projects. Including this $452,000 grant, the D.C. Government plans
to spend more than $2 million on beautification this fiscal year.
Ideally, beauty should be present in everyone's life. Ideally, the city of
Washington should be the most beautiful city in the world. But does it make sense
to drop a $452,000 beautification grant into the lap of D. C. officials when we're
fighting a costly war halfway around the world? I think not.
Think about these two examples of Johnson Administration spending and then
tell me whether the President has been blocking unnecessary expenditures, as he
likes to pretend.
Consider these two items and tell me whether you think Congress should give
the President his income tax increase or cut his fiscal 1968 budget. You and I
both know there are many more items like these two scattered throughout the mammoth
document that passes for a guide to reasonable federal spending.
The President's $135 billion fiscal 1968 budget not only is fat,----bet it has
plenty of fat in it. We in the Congress who care about the taxpayer intend to cut
out as much of it as we can. We know we can do it without cutting necessary services.
We know the people want it done.
Is this a negative attitude? Is it negative to want to streamline the federal
government, set priorities and spend the taxpayer's dollars prudently? I contend
(MORE)
-3-
that is being positive--and in the best possible way. Those who raise their hands
in horror over any attempts at budget-cutting should be consigned to Credibility
Gap, or better yet let's drop them into Credibility Canyon.
The Credibility Gap has widened into a canyon, you know, and for good reason.
A short time ago Defense Department officials admitted that our plane losses
in Vietnam are actually double what they had been reporting----because they had
been giving out figures only on those planes lost in air action and ignoring as far
as the public was concerned, those destroyed other than in combat. There's
accuracy for you;there's truth-in-reporting for you!
The Credibility Gap not only extends to the budget; it's there that it is the
widest.
Take the President's budget for the current fiscal year, for instance. When
the President submitted it to Congress he said we'd have a $1.8 billion deficit.
Republicans said the figure was a phoney. The Administration cried, "Politics."
Nowthe President tells us the 1967 deficit will be more than $9 billion. This error
resulted from a miscalculation of $14 billion in expenditures, and this gross
underestimate of expenditures was not all related to increased costs in Vietnam.
All last year Republicans said the administration was handing out fake
figures on the cost of the Vietnam War. Civilian spokesmen for the Pentagon snorted,
"Politics." Now Defense Secretary McNamara admits he underestimated the cost of
the war by $10 billion.
At the same time that Administration officials were refusing to make known
the true cost of the Vietnam War, they were ramming through Congress such new
programs as Rent Subsidies, the Teacher Corps and many other Great Society fringe
benefits.
All this time prices were moving up and the price stability that had meant
real economic gains for millions of Americans was being destroyed.
President Johnson rejected the recommendation of his top economic adviser,
Gardner Ackley, that he ask Congress to vote an income tax increase. In the
alternative, he also rejected all Republican pleas that he make deep cuts in
domestic spending as offsets to Vietnam War costs.
The result was that our overheated economy rolled blindly on, stimulated by
heavy Great Society spending and slowed down only slightly by such devices as
accelerated collection of income taxes and restoration of part of the excise taxes
repealed in 1965.
Of course, we had to increase the National Debt Limit from $330 billion to
$336 billion recently. And Congress will be asked to raise the debt limit again
(MORE)
-4-
in June by about $10 billion more. Is this only because of the Vietnam War? Not
at all! We can also thank unprecedented domestic spending to expand the so-called
Great Society and tackle more costly social experiments.
Is this truly the way to fashion a Great Society in America? To ladle out
millions of taxpayer dollars for countless experiments of dubious value while over
400,000 American military personnel committed to Vietnam by the Commander in Chief
are engaged in the third largest war in our history?
We want progess in this country, but this isn't the way to get it. The
approach is wrong. It's wrong because it's based on the assumption that all you
have to do is throw enough federal dollars at a problem and it will go away. It's
wrong because it's based on the premise that only Washington has the answers.
We would come up with more of the answers and we would move faster and farther
if we had confidence in our state and local governments and in private enterprise.
It is a mistake to look everlastingly to the federal government.
I have called Washington a puzzling city. Let me tell you it is especially
puzzling to the city officials who try to find their way through the maze of
federal bureaus to track down a federal grant for a local project.
The traditional federal grant-in-aid system is wasteful. It is wasteful of
time, money and human resources. And it makes our state and city governments mere
appendages of Washington, juggled by strings pulled in the Nation's capital.
I predict that Congress in time will adopt a federal tax-sharing system which
ultimately will replace the bogged-down bureaucratic grant-in-aid system and lay
down a challenge to our state and local governments to do a job in solving their
problems.
As federal grant programs expand and increase in number, the federal tax load
grows greater and the red ink rises higher.
We should be managing our national affairs in such a way that income taxes
could be reduced. Tax reduction should be our goal. Instead we have the President
asking for an increase in income taxes to pay for increased domestic spending. It
would make far more sense to cut domestic spending by an equivalent amount.
Now we have Mr. Ackley, chairman of the President's Council of Economic
Advisers, attempting to blackmail Congress into approving the President's proposal
for a 6 percent surtax. If the tax increase is not approved, Mr. Ackley said the
other day, "we might face the danger of a return to the inflationary dangers and
high interest rates of last year."
(MORE)
-5-
My answer to that is that the tax increase will not prevent the unions from
seeking wage increases of 5 percent or more this year. The outlook is for consid-
erable cost-push inflation due to wage increases regardless of what we do on taxes.
As for high interest rates, the Administration could help that situation by getting
out of the short-term money market for as long as possible.
You and I know it was tight money and high interest rates that produced a
virtual depression in the home building industry last year. You and I know the
Administration moved to suspend the 7 percent tax credit for investment in new
plant and buildings because that was one way to attack inflation without getting
anybody but business mad.
Tight money? High interest rates? The hard facts are that government spending
has been and continues to be a major reason for the record demand for money and for
the inflationary pressures that plague our economy. And this is not just because
of the Vietnam War. The record shows that nondefense spending has been rising
nearly as much.
We should be promoting growth in the economy--healthy growth. To do that we
must achieve a balanced fiscal and monetary policy. As a first step toward fiscal
balance, we must put a hold on all new federal programs until current inflationary
pressures ease off.
It is a seeming paradox, but we are encountering recession dangers even while
inflationary pressures continue. This is because the Administration has done such
a poor job of managing the economy ever since the massive tax cuts of 1964 and
1965 touched off strong economic growth. There is drag and sag in the economy right
now.
We need sound new economic growth. I don't think a federal income tax increase
at mid-year is the way to encourage it. What we need is a holddown on federal
spending as a counter to inflation and high interest rates--and restoration of
the investment tax credit to spur capital investment, generate new business con-
fidence and put more people to work.
According to President Johnson's aides, the President believes the best
politics is the best economics. I believe just as firmly that the best economics
is the best politics.
I want federal spending reduced for exactly that reason--because it's the best
economics. Government doesn't produce anything but services. And it can't give
you anything it doesn't take from you in the first place.
(MORE)
-6-
When government takes too much from the private sector of the economy,
government job-training and anti-poverty programs are of no avail. The best
answer to poverty is a good-paying job, and the best way to create jobs is to
encourage sound growth in the economy. Let's help our great private enterprise
system lick poverty by creating jobs and training the men to fill them.
To rely too heavily on government is to invite destruction of that spirit in
Americans which produced the greatest democracy on earth, imperfect as it is. It
brings on what I call the disincentive sickness.
It was George Washington, whose birthday we celebrate today, who said:
"Government is like a fire which, if it is properly controlled, will light your
homes and cook your food and run your factories but, if it is not controlled, it
will destroy you."
President Woodrow Wilson, a Democrat, told the American people: "Liberty
cannot exist where government takes care of the people, but it can only thrive
where the people take care of the government."
I urge you, every one of you, to do your utmost to feed the fire of liberty--
to make sure that government in America will be the servant and not the master of
the people. Thank you.
# # #
FOR RELEASE AT 6:30 PAMA, WEDNESDAY, FEBRUARY 22, 1967
ADDRESS BY REP. GERALD R. FORD, R-MICH.
BEFORE THE NEW JERSEY BUILDING CONTRACTORS ASSN. NEWARK, NEW JERSEY.
Tonight I am inviting you to tour with me the puzzling city of Washington, D.C.
I call it the puzzling city not merely because the Frenchman who laid out its
street pattern had 'a thing' about traffic circles, with streets fanning out like
spokes from the hub of a wheel.
Washington is a puzzling city because it is a city of gaps, a city where the
gap between dreams and reality is most acute, a city where the gap between rhetoric
and reality often is most painful, a city where illusion often passes for truth.
At no time has the city of Washington been more puzzling than during the past
three years, and at present.
It has been so puzzling that even the most casual observer of current events
is familiar with the term, Credibility Gap. Most Americans associate that term
with the equally popular expression "Would you believe?" And their answer is "no."
With the publicity generated by the Adam Clayton Powell, Thomas Dodd, and Bobby
Baker cases, the American public also is beginning to see an Integrity Gap in
Washington. Unfortunately, they tend to tar all members of Congress with the same
brush. This is tragic because I firmly believe the overwhelming majority of members
of the Congress--Democrats and Republicans --are honest, hardworking and able public
officials.
What all of this adds up to is that it's cleanup time in Washington. It's not
fixit time; it's fixup time. We have to clean house--and the sooner the better.
I'm not just talking about abuses of the public trust; I'm talking about
abuses of the public purse.
I'm not just talking about airplane trips on private business at taxpayer
expense; I'm talking about foolish funding, silly spending of taxpayer money in
the name of the public interest.
I'm talking about millions of dollars spent on social experimentation while
there's a war on. I'm talking about millions of dollars spent on beautifying
America while the number of GI's killed or wounded passes the 50,000 mark in a
war costing us nearly $2 billion a month.
Let me give you a couple of examples.
I heard the other day about a half-million-dollar Health-Education-Welfare
Department project to develop a dance and theater curriculum. So I checked into it.
(MORE)
-2-
A U.S. Office of Education official told me the $500,000 is being spent this fiscal
year under Titles 3 and 4 of the Elementary-Secondary Education Act. That's federal
aid to elementary schools and high schools.
The money has been used to establish laboratory theaters in Providence, R.I.,
and New Orleans, La. The idea is to find out how we might be able to use the arts
to teach youngsters who can't learn from books.
As the Office of Education official explained it, "We're trying to see what
the arts can do to meet national needs."
Can you see spending half a million dollars in educational theater workshops
while there's a war on? I can't, however bftily it is described.
It doesn't make sense when we should be setting priorities and cutting out
all but the most essential domestic spending.
I learned, too, about another project that should be most helpful to this
nation in meeting its national needs. The Housing and Urban Development Department
has just approved a $452,375 grant to the District of Columbia for a number of
beautification projects. Including this $452,000 grant, the D.C. Government plans
to spend more than $2 million on beautification this fiscal year.
Ideally, beauty should be present in everyone's life. Ideally, the city of
Washington should be the most beautiful city in the world. But does it make sense
to drop a $452,000 beautification grant into the lap of D. C. officials when we're
fighting a costly war halfway around the world? I think not.
Think about these two examples of Johnson Administration spending and then
tell me whether the President has been blocking unnecessary expenditures, as he
likes to pretend.
Consider these two items and tell me whether you think Congress should give
the President his income tax increase or cut his fiscal 1968 budget. You and I
both know there are many more items like these two scattered throughout the mammoth
document that passes for a guide to reasonable federal spending.
The President's $135 billion fiscal 1968 budget not only is fat,----but it has
plenty of fat in it. We in the Congress who care about the taxpayer intend to cut
out as much of it as we can. We know we can do it without cutting necessary services.
We know the people want it done.
Is this a negative attitude? Is it negative to want to streamline the federal
government, set priorities and spend the taxpayer's dollars prudently? I contend
(MORE)
-3-
that is being positive--and in the best possible way. Those who raise their hands
in horror over any attempts at budget-cutting should be consigned to Credibility
Gap, or better yet let's drop them into Credibility Canyon.
The Credibility Gap has widened into a canyon, you know, and for good reason.
A short time ago Defense Department officials admitted that our plane losses
in Vietnam are actually double what they had been reporting----because they had
been giving out figures only on those planes lost in air action and ignoring as far
as the public was concerned, those destroyed other than in combat. There's
accuracy for you;there's truth-in-reporting for you!
The Credibility Gap not only extends to the budget; it's there that it is the
widest.
Take the President's budget for the current fiscal year, for instance. When
the President submitted it to Congress he said we'd have a $1.8 billion deficit.
Republicans said the figure was a phoney. The Administration cried, "Politics."
Now the President tells us the 1967 deficit will be more than $9 billion. This error
resulted from a miscalculation of $14 billion in expenditures, and this gross
underestimate of expenditures was not all related to increased costs in Vietnam.
All last year Republicans said the administration was handing out fake
figures on the cost of the Vietnam War. Civilian spokesmen for the Pentagon snorted,
"Politics." Now Defense Secretary McNamara admits he underestimated the cost of
the war by $10 billion.
At the same time that Administration officials were refusing to make known
the true cost of the Vietnam War, they were ramming through Congress such new
programs as Rent Subsidies, the Teacher Corps and many other Great Society fringe
benefits.
All this time prices were moving up and the price stability that had meant
real economic gains for millions of Americans was being destroyed.
President Johnson rejected the recommendation of his top economic adviser,
Gardner Ackley, that he ask Congress to vote an income tax increase. In the
alternative, he also rejected all Republican pleas that he make deep cuts in
domestic spending as offsets to Vietnam War costs.
The result was that our overheated economy rolled blindly on, stimulated by
heavy Great Society spending and slowed down only slightly by such devices as
accelerated collection of income taxes and restoration of part of the excise taxes
repealed in 1965.
Of course, we had to increase the National Debt Limit from $330 billion to
$336 billion recently. And Congress will be asked to raise the debt limit again
(MORE)
-4-
in June by about $10 billion more. Is this only because of the Vietnam War? Not
at all! We can also thank unprecedented domestic spending to expand the so-called
Great Society and tackle more costly social experiments.
Is this truly the way to fashion a Great Society in America? To ladle out
millions of taxpayer dollars for countless experiments of dubious value while over
400,000 American military personnel committed to Vietnam by the Commander in Chief
are engaged in the third largest war in our history?
We want progess in this country, but this isn't the way to get it. The
approach is wrong. It's wrong because it's based on the assumption that all you
have to do is throw enough federal dollars at a problem and it will go away. It's
wrong because it's based on the premise that only Washington has the answers.
We would come up with more of the answers and we would move faster and farther
if we had confidence in our state and local governments and in private enterprise.
It is a mistake to look everlastingly to the federal government.
I have called Washington a puzzling city. Let me tell you it is especially
puzzling to the city officials who try to find their way through the maze of
federal bureaus to track down a federal grant for a local project.
The traditional federal grant-in-aid system is wasteful. It is wasteful of
time, money and human resources. And it makes our state and city governments mere
appendages of Washington, juggled by strings pulled in the Nation's capital.
I predict that Congress in time will adopt a federal tax-sharing system which
ultimately will replace the bogged-down bureaucratic grant-in-aid system and lay
down a challenge to our state and local governments to do a job in solving their
problems.
As federal grant programs expand and increase in number, the federal tax load
grows greater and the red ink rises higher.
We should be managing our national affairs in such a way that income taxes
could be reduced. Tax reduction should be our goal. Instead we have the President
asking for an increase in income taxes to pay for increased domestic spending. It
would make far more sense to cut domestic spending by an equivalent amount.
Now we have Mr. Ackley, chairman of the President's Council of Economic
Advisers, attempting to blackmail Congress into approving the President's proposal
for a 6 percent surtax. If the tax increase is not approved, Mr. Ackley said the
other day, "we might face the danger of a return to the inflationary dangers and
high interest rates of last year."
(MORE)
-5-
My answer to that is that the tax increase will not prevent the unions from
seeking wage increases of 5 percent or more this year. The outlook is for consid-
erable cost-push inflation due to wage increases regardless of what we do on taxes.
As for high interest rates, the Administration could help that situation by getting
out of the short-term money market for as long as possible.
You and I know it was tight money and high interest rates that produced a
virtual depression in the home building industry last year. You and I know the
Administration moved to suspend the 7 percent tax credit for investment in new
plant and buildings because that was one way to attack inflation without getting
anybody but business mad.
Tight money? High interest rates? The hard facts are that government spending
has been and continues to be a major reason for the record demand for money and for
the inflationary pressures that plague our economy. And this is not just because
of the Vietnam War. The record shows that nondefense spending has been rising
nearly as much.
We should be promoting growth in the economy--healthy growth. To do that we
must achieve a balanced fiscal and monetary policy. As a first step toward fiscal
balance, we must put a hold on all new federal programs until current inflationary
pressures ease off.
It is a seeming paradox, but we are encountering recession dangers even while
inflationary pressures continue. This is because the Administration has done such
a poor job of managing the economy ever since the massive tax cuts of 1964 and
1965 touched off strong economic growth. There is drag and sag in the economy right
now.
We need sound new economic growth. I don't think a federal income tax increase
at mid-year is the way to encourage it. What we need is a holddown on federal
spending as a counter to inflation and high interest rates--and restoration of
the investment tax credit to spur capital investment, generate new business con-
fidence and put more people to work.
According to President Johnson's aides, the President believes the best
politics is the best economics. I believe just as firmly that the best economics
is the best politics.
I want federal spending reduced for exactly that reason--because it's the best
economics. Government doesn't produce anything but services. And it can't give
you anything it doesn't take from you in the first place.
(MORE)
-6-
When government takes too much from the private sector of the economy,
government job-training and anti-poverty programs are of no avail. The best
answer to poverty is a good-paying job, and the best way to create jobs is to
encourage sound growth in the economy. Let's help our great private enterprise
system lick poverty by creating jobs and training the men to fill them.
To rely too heavily on government is to invite destruction of that spirit in
Americans which produced the greatest democracy on earth, imperfect as it is. It
brings on what I call the disincentive sickness.
It was George Washington, whose birthday we celebrate today, who said:
"Government is like a fire which, if it is properly controlled, will light your
homes and cook your food and run your factories but, if it is not controlled, it
will destroy you."
President Woodrow Wilson, a Democrat, told the American people: "Liberty
cannot exist where government takes care of the people, but it can only thrive
where the people take care of the government."
I urge you, every one of you, to do your utmost to feed the fire of liberty--
to make sure that government in America will be the servant and not the master of
the people. Thank you.
# # #
Speech the Week-
PUBLIC RELATIONS OFFICE
REPUBLICAN CONGRESSIONAL COMMITTEE
312 CONGRESSIONAL HOTEL
WASHINGTON, D. C.
SUBJECT: Washington--World's Most Puzzling City
Remarks of House Republican Leader Gerald R. Ford
Before the New Jersey Building Contractors Association
Newark, N.J., February 22, 1967
TONIGHT, I AM inviting you to tour with me the puzzling city of Washington, D.C.
I call it the puzzling city not merely because the Frenchman who laid out its street
pattern had 'a thing' about traffic circles, with streets fanning out like spokes from the hub of
a wheel.
Washington is a puzzling city because it is a city of gaps, a city where the gap be-
tween dreams and reality is most acute, a city where the gap between rhetoric and reality often
is most painful, a city where illusion often passes for truth.
At no time has the city of Washington been more puzzling than during the past three
years, and at present.
It has been so puzzling that even the most casual observer of current events is familiar
with the term, Credibility Gap. Most Americans associate that term with the equally popular
expression, "Would you believe?" And their answer is "no."
With the publicity generated by the Adam Clayton Powell, Thomas Dodd, and Bobby
Baker cases, the American public also is beginning to see an Integrity Gap in Washington. Un-
fortunately, they tend to tar all members of Congress with the same brush. This is tragic be-
cause I firmly believe the overwhelming majority of members of the Congress-Democrats and
Republicans--are honest, hardworking and able public officials.
WHAT ALL OF THIS adds up to is that it's cleanup time in Washington. It's not
fixit time; it's fixup time. We have to clean house--and the sooner the better.
I'm not just talking about abuses of the public trust; I'm talking about abuses of the
public purse.
I'm not just talking about airplane trips on private business at taxpayer expense; I'm
talking about foolish funding, silly spending of taxpayer money in the name of the public inter-
est.
I'm talking about millions of dollars spent on social experimentation while there's a
war on. I'm talking about millions of dollars spent on beautifying America while the number of
GI's killed or wounded passes the 50,000 mark in a war costing US nearly $2 billion a month.
Let me give you a couple of examples.
I heard the other day about a half-million-dollar Health-Education-Welfare Depart-
ment project to develop a dance and theater curriculum. So I checked into it. A U.S. Office
of Education official told me the $500,000 is being spent this fiscal year under Titles 3 and 4
of the Elemantary-Secondary Education Act. That's Federal aid to elementary schools and
high schools.
- more -
- 2 -
THE MONEY HAS BEEN USED to establish laboratory theaters in Providence, R. 1.,
and New Orleans, La. The idea is to find out how we might be able to use the arts to teach
youngsters who can't learn from books.
As the Office of Education official explained it, "We're trying to see what the arts
can do to meet national needs."
Can you see spending half a million dollars in educational theater workshops while
there's a war on? I can't, however loftily it is described.
It doesn't make sense when we should be setting priorities and cutting out all but
the most essential domestic spending.
I learned, too, about another project that should be most helpful to this nation in
meeting its national needs. The Housing and Urban Development Department has just approved
a $452,375 grant to the District of Columbia for a number of beautification projects. Including
this $452,000 grant, the D.C. Government plans to spend more than $2 million on beautification
this fiscal year.
Ideally, beauty should be present in everyone's life. Ideally, the city of Washing-
ton should be the most beautiful city in the world. But does it make sense to drop a $452,000
beautification grant into the lap of D.C. officials when we're fighting a costly war halfway
around the world? I think not.
THINK ABOUT THESE TWO examples of Johnson Administration spending and then
tell me whether the President has been blocking unnecessary expenditures, as he likes to pretend.
Consider these two items and tell me whether you think Congress should give the
President his income tax increase or cut his fiscal 1968 budget. You and I both know there are
many more items like these two scattered throughout the mammoth document that passes for a
guide to reasonable Federal spending.
The President's $135 billion fiscal 1968 budget not only is fat--but it has plenty of
fat in it. We in the Congress who care about the taxpayer intend to cut out as much of it as
we can. We know we can do it without cutting necessary services. We know the people want
it done.
Is this a negative attitude? Is it negative to want to streamline the Federal Govern-
ment, set priorities and spend the taxpayer's dollars prudently? I contend that is being posi-
tive--and in the best possible way. Those who raise their hands in horror over any attempts at
budget-cutting should be consigned to Credibility Gap, or better yet let's drop them into
Credibility Canyon.
The Credibility Gap has widened into a canyon, you know, and for good reason.
A SHORT TIME AGO Defense Department officials admitted that our plane losses
in Vietnam are actually double what they had been reporting--because they had been giving
out figures only on those planes lost in air action and ignoring as far as the public was con-
cerned, those destroyed other than in combat. There's accuracy for you; there's truth-in-re-
porting for you!
The Credibility Gap not only extends to the budget; it's there that it is the widest.
Take the President's budget for the current fiscal year, for instance. When the
President submitted it to Congress he said we'd have a $1.8 billion deficit. Republicans said
the figure was a phoney. The Administration cried, "Politics." Now the President tells US
the 1967 deficit will be more than $9 billion. This error resulted from a miscalculation of $14
billion in expenditures, and this gross underestimate of expenditures was not all related to in-
creased costs in Vietnam.
- more -
- 3 -
All last year Republicans said the Administration was handing out fake figures on the
cost of the Vietnam War. Civilian spokesmen for the Pentagon snorted, "Politics." Now De-
fense Secretary McNamara admits he underestimated the cost of the war by $10 billion.
At the same time that Administration officials were refusing to make known the true
cost of the Vietnam War, they were ramming through Congress such new programs as Rent Sub-
sidies, the Teacher Corps and many other Great Society fringe benefits.
ALL THIS TIME prices were moving up and the price stability that had meant real
economic gains for millions of Americans was being destroyed.
President Johnson rejected the recommendation of his top economic adviser, Gardner
Ackley, that he ask Congress to vote an income tax increase. In the alternative, he also re-
jected all Republican pleas that he make deep cuts in domestic spending as offsets to Vietnam
War costs.
The result was that our overheated economy rolled blindly on, stimulated by heavy
Great Society spending and slowed down only slightly by such devices as accelerated collection
of income taxes and restoration of part of the excise taxes repealed in 1965.
Of course, we had to increase the National Debt Limit from $330 billion to $336
billion recently. And Congress will be asked to raise the debt limit again in June by about $10
billion more. Is this only because of the Vietnam War? Not at alll We can also thank un-
precedented domestic spending to expand the so-called Great Society and tackle more costly
social experiments.
Is this truly the way to fashion a Great Society in America? To ladle out millions
of taxpayer dollars for countless experiments of dubious value while over 400,000 American
military personnel committed to Vietnam by the Commander in Chief are engaged in the third
largest war in our history?
WE WANT PROGRESS in this country, but this isn't the way to get it. The approach
is wrong. It's wrong because it's based on the assumption that all you have to do is throw enough
Federal dollars at a problem and it will go away. It's wrong because it's based on the premise
that only Washington has the answers.
We would come up with more of the answers and we would move faster and farther
if we had confidence in our State and local governments and in private enterprise. If is a
mistake to look everlastingly to the Federal government.
I have called Washington a puzzling city. Let me tell you it is especially puzzling
to the city officials who try to find their way through the maze of Federal bureaus to track down
a Federal grant for a local project.
The traditional Federal grant-in-aid system is wasteful. It is wasteful of time, money
and human resources. And it makes our State and city governments mere appendages of Wash-
ington, juggled by strings pulled in the Nation's capital.
I predict that Congress in time will adopt a Federal tax-sharing system which ultimate-
ly will replace the bogged-down bureaucratic grant-in-aid system and lay down a challenge to
our State and local governments to do a job in solving their problems.
AS FEDERAL GRANT programs expand and increase in number, the Federal tax load
grows greater and the red ink rises higher.
We should be managing our national affairs in such a way that income taxes could
be reduced. Tax reduction should be our goal. Instead we have the President asking for an
increase in income taxes to pay for increased domestic spending. It would make far more sense
to cut domestic spending by an equivalent amount.
- more -
- 4 -
Now we have Mr. Ackley, chairman of the President's Council of Economic Advisers,
attempting to blackmail Congress into approving the President's proposal for C 6 percent sur-
tax. If the tax increase is not approved, Mr. Ackley said the other day, "we might face the
danger of a return to the inflationary dangers and high interest rates of last year."
My answer to that is that the tax increase will not prevent the unions from seeking
wage increases of 5 percent or more this year. The outlook is for considerable cost-push in-
flation due to wage increases regardless of what we do on taxes. As for high interest rates,
the Administration could help that situation by getting out of the short-term money market
for as long as possible.
You and I know it was tight money and high interest rates that produced G virtual
depression in the home building industry last year. You and I know the Administration moved
to suspend the 7 percent tax credit for investment in new plant and buildings because that was
one way to attack inflation without getting anybody but business mad.
TIGHT MONEY? High interest rates? The hard facts are that government spend-
ing has been and continues to be a major reason for the record demand for money and for the
inflationary pressures that plague our economy. And this is not just because of the Vietnam
War. The record shows that nondefense spending has been rising nearly as much.
We should be promoting growth in the economy-healthy growth. To do that we
must achieve a balanced fiscal and monetary policy. As a first step toward fiscal balance,
we must put a hold on all new Federal programs until current inflationary pressures ease off.
It is a seeming paradox, but we are encountering recession dangers even while in-
flationary pressures continue. This is because the Administration has done such a poor job of
managing the economy ever since the massive tax cuts of 1964 and 1965 touched off strong
economic growth. There is drag and sag in the economy right now.
We need sound new economic growth. I don't think a Federal income tax increase
of mid-year is the way to encourage it. What we need is a holddown on Federal spending as
C counter to inflation and high interest rates--and restoration of the investment tax credit to
spur capital investment, generate new business confidence and put more people to work.
According to President Johnson's aides, the President believes the best politics
is the best economics. i believe just as firmly that the best economics is the best politics.
I WANT FEDERAL SPENDING reduced for exactly that reason--because it's the
best economics. Government doesn't produce anything but services. And it can't give you
anything it doesn't take from you in the first place.
When government takes too much from the private sector of the economy, govern-
ment job-training and anti-poverty programs are of no avail. The best answer to poverty is a
good-paying job, and the best way to create jobs is to encourage sound growth in the economy.
Let's help our great private enterprise system lick poverty by creating jobs and training the
men to fill them.
To rely too heavily on government is to invite destruction of that spirit in Americans
which produced the greatest democracy on earth, imperfect as it is. It brings on what I call
the disincentive sickness.
If was George Washington who said: "Government is like a fire which, if it is
properly controlled, will light your homes and cook your food and run your factories but, if it
is not controlled, it will destroy you."
President Woodrow Wilson, a Democrat, told the American people: "Liberty cannot
exist where government takes care of the people, but it can only thrive where the people take
care of the government."
I urge you, every one of you, to do your utmost to feed the fire of liberty--to
make sure that government in America will be the servant and not the master of the people.
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