I’ll be asking you for a substantial increase in funds for public jobs for our young people, and I also am recommending that the Congress continue the public service employment programs at more than twice the level of a year ago. When welfare reform is completed, we will have more than a million additional jobs so that those on welfare who are able to work can work.
However, again, we know that in our free society, private business is still the best source of new jobs. Therefore, I will propose a new program to encourage businesses to hire young and disadvantaged Americans. These young people only need skills and a chance in order to take their place in our economic system. Let’s give them the chance they need. A major step in the right direction would be the early passage of a greatly improved Humphrey-Hawkins bill.
My budget for 1979 addresses these national needs, but it is lean and tight. I have cut waste wherever possible.
I am proposing an increase of less than 2 percent after adjusting for inflation, the smallest increase in the Federal budget in 4 years.
Lately, Federal spending has taken a steadily increasing portion of what Americans produce. Our new budget reverses that trend, and later I hope to bring the Government’s toll down even further. And with your help, we’ll do that.
In time of high employment and a strong economy, deficit spending should not be a feature of our budget. As the economy continues to gain strength and as our unemployment rates continue to fall, revenues will grow. With careful planning, efficient management, and proper restraint on spending, we can move rapidly toward a balanced budget, and we will.
Next year the budget deficit will be only slightly less than this year. But one-third of the deficit is due to the necessary tax cuts that I’ve proposed. This year the right choice is to reduce the burden on taxpayers and provide more jobs for our people.
The third element in our program is a renewed attack on inflation. We’ve learned the hard way that high unemployment will not prevent or cure inflation. Government can help us by stimulating private investment and by maintaining a responsible economic policy. Through a new top-level review process, we will do a better job of reducing Government regulation that drives up costs and drives up prices.
But again, Government alone cannot bring down the rate of inflation. When a level of high inflation is expected to continue, then companies raise prices to protect their profit margins against prospective increases in wages and other costs, while workers demand higher wages as protection against expected price increases. It’s like an escalation in the arms race, and understandably, no one wants to disarm alone.
Now, no one firm or a group of workers can halt this process. It’s an effort that we must all make together. I’m therefore asking government, business, labor, and other groups to join in a voluntary program to moderate inflation by holding wage and price increases in each sector of the economy during 1978 below the average increases of the last 2 years.