But recession is only one enemy of a free economy—inflation is another. Last year, 1961, despite rising production and demand, consumer prices held almost steady—and wholesale prices declined. This is the best record of overall price stability of any comparable period of recovery since the end of World War II.
Inflation too often follows in the shadow of growth—while price stability is made easy by stagnation or controls. But we mean to maintain both stability and growth in a climate of freedom.
Our first line of defense against inflation is the good sense and public spirit of business and labor—keeping their total increases in wages and profits in step with productivity. There is no single statistical test to guide each company and each union. But I strongly urge them—for their country’s interest, and for their own—to apply the test of the public interest to these transactions.
Within this same framework of growth and wage-price stability:
—This administration has helped keep our economy competitive by widening the access of small business to credit and Government contracts, and by stepping up the drive against monopoly, price-fixing, and racketeering;
—We will submit a Federal Pay Reform bill aimed at giving our classified, postal, and other employees new pay scales more comparable to those of private industry;
—We are holding the fiscal 1962 budget deficit far below the level incurred after the last recession in 1958; and, finally,
—I am submitting for fiscal 1963 a balanced Federal Budget.
This is a joint responsibility, requiring Congressional cooperation on appropriations, and on three sources of income in particular:
(1) First, an increase in postal rates, to end the postal deficit;