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;
(2) Second, passage of the tax reforms previously urged, to remove unwarranted tax preferences, and to apply to dividends and to interest the same withholding requirements we have long applied to wages; and