Remarks at a Luncheon of the Committee for Economic Development

Mr. Wilde, my fellow Americans:

Unaccustomed as I have become to public speaking over the past 15 days, I particularly welcome this opportunity to come to talk with you today.

For more than 20 years the Committee for Economic Development has contributed much to enlighten the discussion of America's most difficult economic problems. Individually and together you have made a most valuable and quite unique contribution to responsible public policy. In the years ahead I hope your example will not be so unique but I hope it will be much more universal.

The great opportunity--and greater obligation--of this moment in our national life is the opportunity and the obligation for all segments of our society to try to be constructive.

Together we have achieved a rather broad and deep consensus.

It is not a consensus on personality. It is not a consensus on party.

It is a consensus on national purpose and national policy.

We know now--as we could not know in the years before--that we are a people who are more united than divided on America's goals.

Out of the events of the past 364 days we have emerged as a more mature, a more reflective, a more discerning and determined people.

We know--better, I believe, than any other generation of this century--what kind of country we want America to be. We know what we want to preserve, what we want to pursue at home and in the world.

For any nation, such a moment, I think, is rare.

For our Nation, such a moment is too rare to lose.

So, this moment of consensus must last and live and grow into a long age of constructiveness--an age in which all sections, all segments, and all sectors contribute their best to building strong foundations for greatness that we hope is still to come.

I said during the recent campaign that I believe we are entering a new era in the affairs of the world. All around the globe new leadership is at the helm of nations which are old and young, that are free and that are communistic. Within both the free world and the Communist world new forces and new factors are at work.

None of us can know the full meaning of these changes that are taking place, but we can realistically, I think, recognize that the era ahead will be more challenging, will be more competitive, will be more exacting and, yes, it is going to be more demanding.

Old precepts, old premises, and old patterns may be less and less pertinent to the realities of the new era, and we must be the first and not the last to recognize reality.

But the change of our times is not confined to the world that is beyond these shores. In all the world, I think there is no nation that is changing more dynamically than our own.

I mention only one measure of such change.

Since this administration began, the population of the United States has increased by more than 10 million, and that is equal to half the population of Canada. Since the tragic day that I came to the Presidency a year ago, there are now about 2 1/2 million more Americans.

Here at home--as in the world--a new era is beginning. If we are to put in place sure and solid foundations for our future, I believe we must test the realism of the precepts, premises, and patterns of many of our public policies and attitudes.

The temptation is great today to talk in terms of programs.

There is a time and a place for that, too, but I would rather, with this audience, speak in terms of principles which must and principles which will guide us on our programs.

Specifically, I want to speak in terms of principles relating to the fiscal policies of the Federal Government.

For much too long, the constructiveness and the creativity of the American people have been dissipated by divisions over our Federal budget.

I just left a long discussion with my Cabinet where that was a priority subject. As my Director of the Budget, Kermit Gordon, has emphasized to you, our very definitions of conservatism and liberalism have come to mean attitudes toward budget size.

For myself, I believe that the budget of our Government should be an area of broadest consensus--not an arena of the most partisan contention.

I might say that we did not get an exact consensus on the last budget I submitted, but it wasn't because I didn't try. I had 37 days and nights that I worked over it, and for the first time in many years, we changed the direction of it. We actually submitted less to the Congress than we had spent the year before. The first man to see that budget was Harry Byrd who did not agree with all of it, and John Williams, the ranking Republican on the Finance Committee.

To specify, I want to say I believe that:

1. Barring massive changes in defense spending, your Federal Government does not have to grow in size relative to the size of the economy.

2. With the continuing drive for economy and efficiency which we are waging relentlessly-and if you read the morning papers you will see where Mr. McNamara has put some substance to my promise and it is not just a coincidence that he announced the closing of these defense installations to the Congressmen this afternoon and I announced my departure for Texas simultaneously-we can keep Government budgets under control so that they grow no more rapidly, and I would hope may grow less rapidly, than our economy grows.

3. By the same approach, we can have fewer Federal workers per thousand of the total population. I might add that in September you had fewer Federal workers than at any time in the last 2 1/2 years. I hope to have a reduction in October although I have some doubts.

4. Programs that no longer serve a vital purpose can and must be pruned away and all programs must be administered with the same careful efficiency as a prudent householder or a prudent businessman applies.

5. A frugal budget need not and should not be a stagnant budget. It must have room for new programs to meet the aspirations of the American people and to help us meet unfilled needs. At the same time new programs should be undertaken only when they offer a higher value to the Nation than we would get if the taxpayers spent the money themselves.

6. The Federal Government must take into account the impact of its total spending and its taxing on our economic life, on markets, on jobs, on wages, on prices, on capital investments.

The Committee for Economic Development recognized this principle long ago. An ever-broadening consensus--conservative and liberal, labor and business, Republican and Democrat--now accepts it. That consensus recognizes that true fiscal responsibility will achieve a balanced budget out of the rising revenues of the healthy and prosperous economy. Budgetary balance will not be achieved by reckless cutbacks of expenditures to fit the tax revenues of a sick economy.

But can these principles be applied? I think the answer is definitely yes, because this is what we are doing.

Let me give you these examples:

1. To meet the demands of a society that is rapidly growing in population, wealth, and complexity, we are spending more for education, vocational training, and retraining. A child with a grammar school education will earn during his lifetime an average of $152,000. A child who goes through high school earns not $150,000 but $272,000. A child who will go through college and beyond in his lifetime will average $452,000.

So, in plain, hard figures, it means that a college trained person earns $300,000 more than one who has not had elementary, secondary, or college education. When Uncle Sam will get, say, 52 percent of that extra $300,000, we get a pretty good return on the investment we made in training that person.

So, I submit, to increase the earnings of every American child, it is not only bankable but it is a prime investment. If private financing lends a man $20,000 over 25 years to build a house which does not grow and make a profit, it is my position that the same homeowner can be loaned the money to build his son into an educated man whose income will grow $300,000 on a mere $20,000 loan.

We must build more hospitals. We must have more money for medical research and public health. You take the great loss that this Nation suffers--resources--every year by the millions who are stricken down with strokes, with cancer, and with heart attacks. It makes it absolutely essential that we pursue with vigor and a sense of urgency a means for finding the answers to those mankillers.

We must have a fight on poverty and we must make it stronger than it has ever been before in our history.

Total Federal spending in 1965 will be the lowest in 14 years in terms of our gross national product.

Nondefense spending will be lower than it was 30 years ago in terms of our gross national product.

2. There are fewer Federal employees now than there were a year ago when I took office. That is unusual with a growing 'population. It is unusual with so many of our unfilled needs that we have actually cut not only Federal expenditures but we have cut Federal employees. Federal workers now are 3.9 percent of total nonfarm employment.

In 1953 they were 4.6 percent. You see the reduction in the percentage that has been made.

Eliminating the employees of the Defense Department, Post Office Department, and Veterans Administration--the three big, substantial employers--your Federal Government now operates with fewer civilian employees than the Nation's telephone industry.

3. What about the prospects in regard to defense?

Well, for the past 4 years, military spending has risen by almost 25 percent--defense expenditures up 25 percent the last 4 years. We have spent roughly $30 billion more on defense than we were spending in 1960 in these 4 years.

After President Kennedy came back from Geneva, we felt that we had better increase our preparedness efforts. We have spent about $10 billion more on space than at the rate we were spending in 1960--from $41 billion in fiscal 1960 for defense to nearly $50 billion in fiscal 1964. Today, for fiscal 1965 and beyond, the level of defense spending is going to remain constant or we will make a slight reduction if there is no significant change in the threats that we face. I emphasize if there are no significant changes.

There were significant changes that faced President Kennedy after the conference that he held with Premier Khrushchev.

There are two reasons. First, we have achieved many of the needed changes and increases in our military force structure as a result of this heavy expenditure and, second, we have begun to benefit from the rigorous 5-year cost-reduction program which last year alone saved $2.8 billion in unnecessary expenditures and in operating costs.

I have pledged that we will remain first in the use of science and technology for the protection of our people. I do not think that we as a Nation can be first in the world and second in space.

We are now spending more than $6 billion per year for military research and development, and research costs will probably increase in future years.

But the budgetary impact of increased military strength will be more than offset by savings from Mr. McNamara's cost-reduction program. That program should by fiscal 1968 be saving us $4.6 billion each year--$4 billion a year.

My point then is simply this: in the new era beginning for our country, we are challenged to do more than we have ever done to preserve peace, to defend freedom, to assure freedom's full meaning for all Americans. But we need not and we must not restrict our response to these challenges by being either parsimonious or prodigal with our public moneys.

The kind of constructive and creative spirit that CED has fostered can help us, I think, find new guides, better ways, more satisfactory answers--just as the $14 billion tax cut is doing.

Many of you had much to do with making the tax cut possible.

Benefits are evident everywhere in rising sales, in expanding payrolls, all without the inflation many feared.

When you encourage men to go out and make capital investments and you give them the hope--we hope it is a prudent hope, too--that they can recover a reasonable return on that investment and not have it confiscated, you do many things. First and foremost, you increase payrolls. Second, you increase price stability because the more competition you have and the more productive capacity you have, the more likely you are to have stable prices and not have shortages.

We are maintaining, I think, the best record of overall price stability of any industrial country in the world, and we are doing it without the iron hand of price or wage controls. We are doing it with a free spirited competition, and we are doing it by going out and making new capital investments and by creating additional productivity with a sense of restraint and responsibility, and that is not a one-way street either.

We must have responsible businessmen and responsible labor leaders, and they must put their country ahead of themselves.

Wholesale prices are no higher than they were last January, and they are the same as the 1959 average. Prices that consumers pay have inched up since 1961 at half the rate of the preceding 4 years.

Our economy is expanding without excesses and without distortions and without the tightening of credit and without the boosting of interest that can so easily turn expansion into a recession. We so very much hope that we will not have these boosts and that we will not have this recession.

I know that there are some advocates in some quarters of the business community, and there may be some necessary actions that have to be taken, but we are very proud of the fact that we have now gone 45 months without any dip, without any recession. That is the longest in the history of this country and we are fighting to extend that record.

This price stability has enabled us to cut our international payments deficits in half. Our balance of payments, I believe, was 3.3 last year and will perhaps be 2 this year and stop the outflow of our gold.

The price level in a free economy can remain stable only if wage advances generally stay within the bounds of the economic gains in productivity--and if industries which enjoy very high productivity gains share their gains with consumers in lower prices to offset the rising 'prices of services where productivity often lags.

This, then, is our basic guidepost. There is no "big stick" policy to enforce such a policy--only the force of good business judgment, only the force of responsible union policy, only the force of an informed public opinion.

But I believe, as I said earlier, that there is a strong consensus of responsibility, prudence, and understanding in America. There is a will to be constructive, there is a will to be progressive and to be prudent.

What the new eras abroad and at home may hold, none can know, but with this spirit here I think we can embark upon the new age with confidence in our country and strength in its successes.

The next 4 years we are going to try to have progressive and prudent government leadership. This is going to be no business government. This is going to be no labor government. We are not trying to apply any special label and we are not trying to court any specific segment of our population.

I want very much to be President of all of the people, and I want every businessman in this land and every workingman to know that it is my purpose and my goal to give equality of treatment and to give the kind of leadership that is dependable and that is calculated to earn the confidence of all of the citizens.

I do not interpret the selection as a mandate to any reckless, novel, dangerous, or unique course. Our emphasis is going to be this next 4 years just as it was when the Republic of Texas was founded.

The President of the Republic of Texas said, "Education is the guardian genius of democracy. It is the only ruler that free men recognize and the only dictator that free men desire."

So, our budget is going to emphasize reform in cutting out any unnecessary expenditures that we can cut out, and we are going to place a very special emphasis on teaching people and preparing people and qualifying people and trying to make taxpayers out of taxeaters.

I have gone into the unemployment pockets of this country. I have seen the hope in the eyes of the people that a better day would come notwithstanding what you might hear, see, or believe.

Most every citizen in this land wants a job and would like to work. The only way that I know that we can realize--in fact, we will never realize full employment but we want full employment opportunity. We may not have all of our people fully educated but we want full educational opportunity.

I do not want to see several generations come and go, never having known private employment.

We have 3,200,000 18-year-olds that are coming into that age group this year. We came back from the war and we started adding to our families, and now there are 3,200,000 coming in that group. There will be more than half a million of those who will find the college door closed to them--you can't enter because we have no room for you--and they will find no jobs available at the doors on which they knock. We have to do something with them. We can let them become a nuisance, a delinquent, or we can prepare them to be qualified to do what needs to be done.

I was in one State and they told me that they had unemployment of 138,000 but they had 93,000 vacancies that they could not get filled because the men were not equipped to fill the jobs and they were not equipped or skilled to perform the work.

I particularly need good men in the Federal Government. I have spent my nights ever since the election--I am the only man in town, I think, who has not had a vacation. When they have been feeding me Cabinet officers at the rate of two or three a day with their budgets, they call it a working vacation-whatever that is. I guess it is because I breathe fresh, unpolluted air down on the Pedernales--that's what you call it.

We need topflight men, and those of you who find time to criticize the mistakes we make can spare us some of those mistakes and some of that foolishness if you will just look into your own organizations and find a man or two who needs some Washington training and experience in administration-that we need.

There are some men who have stayed here as long as they can afford to stay. They are out of money and the bankers are calling their loans. I lost an Under Secretary of the Treasury, a real financial genius, because a banker would not extend his loan and Congress would not pass the pay bill.

In the days ahead, I would be very grateful if you would let the Chairman of the Civil Service Commission, Mr. John Macy, know of any competent executive leaders whom you think might be persuaded to come here and help us do the most important job in the world--trying to preserve it and trying to lead it, trying to keep our eyes on the stars and our feet on the ground. I never want to keep both of them there all the time, but I want to take one step and, when I do, be sure the other one is holding steady. I don't want to get both of them off the ground at the same time, as some people do.

So, we do need good, trained leaders in Government because the rest of the world looks to us to set an example, and I look to you to help me.

The doors of the White House are open to you. I cannot see each of you every time that you may have a problem that you want to discuss but I do want you to know that I feel your problems are mine. I do want to see you prosper and make profits.

Profits after taxes this year are up 20 percent. Labor's wages after taxes are up some 6 or 7 percent. We are doing well, we want to continue to do well, but we can do better.

I am distressed sometimes when I see the divisions in the country that you should not think that that should concern a man who got the support of the people that I did in such overwhelming numbers. I do not expect unanimity in our ranks. I do know we will have differences of opinion, but I said when I became Democratic leader, and Mr. Eisenhower was a Republican President, that I would support the President when he was right, and I would hold his hand high, and if he were wrong, in my judgment, I would try to submit an alternative to his program and let the people choose between the two, let the Senators choose. If I disagreed with him, I would say so courteously, candidly. I would not discuss personalities or indulge in them, and I would not talk about his family or his dogs.

The people did not let me stay in the minority but 2 years, and they selected a Democratic majority to work with a Republican President the remaining 6 years-because I think they approved of the responsibility.

I am pleased to say without getting political that a good many members, a good many voters in this country, a good many citizens of this country still feel the same way. They think a man's first duty is to his country and that is my philosophy.

When asked to explain whether I was a liberal or conservative, or rancher or banker, or businessman or public servant, I said I am all of them. I do not go by any label. First, I am proud I am a free man. Second, I am proud I am an American. Third, I am proud I am a public servant. This may be a little dangerous to say to some of you, but, fourth, I am proud to be a Democrat. But in that order.

We do not have any corner on patriotism. People who differ with us on party principles love their country just as much as we do and have fought for it just as much as we have and have bled for it just as much as we have. So let's try to avoid these deep divisions that personalities create.

Let's try to keep our eye on the big thing. We are the greatest Nation in the world, and we have so much to preserve and so much to protect. We are going to preserve it and we are going to protect it. We are going to develop it, and we are going to utilize it.

We are going to leave this place a better place than we found it.

Thank you very much.