State of the Union | Page 8

own ideals here, we cannot expect others to accept them. And when the youngest child alive today has grown to the cares of manhood, our position in the world will be determined first of all by what provisions we make today--for his education, his health, and his opportunities for a good home and a good job and a good life.
At home, we began the year in the valley of recession--we completed it on the high road of recovery and growth. With the help of new Congressionally approved or Administratively increased stimulants to our economy, the number of major surplus labor areas has declined from 101 to 60; non-agricultural employment has increased by more than a million jobs; and the average factory work-week has risen to well over 40 hours. At year's end the economy which Mr. Khrushchev once called a "stumbling horse" was racing to new records in consumer spending, labor income, and industrial production.
We are gratified--but we are not satisfied. Too many unemployed are still looking for the blessings of prosperity. As those who leave our schools and farms demand new jobs, automation takes old jobs away. To expand our growth and job opportunities, I urge on the Congress three measures:
(1) First, the Manpower Training and Development Act, to stop the waste of able-bodied men and women who want to work, but whose only skill has been replaced by a machine, or moved with a mill, or shut down with a mine;
(2) Second, the Youth Employment Opportunities Act, to help train and place not only the one million young Americans who are both out of school and out of work, but the twenty-six million young Americans entering the labor market in this decade; and
(3) Third, the 8 percent tax credit for investment in machinery and equipment, which, combined with planned revisions of depreciation allowances, will spur our modernization, our growth, and our ability to compete abroad.
Moreover--pleasant as it may be to bask in the warmth of recovery--let us not forget that we have suffered three recessions in the last 7 years. The time to repair the roof is when the sun is shining--by filling three basic gaps in our anti-recession protection. We need:
(1) First, Presidential stand-by authority, subject to Congressional veto, to adjust personal income tax rates downward within a specified range and time, to slow down an economic decline before it has dragged us all down;
(2) Second, Presidential stand-by authority, upon a given rise in the rate of unemployment, to accelerate Federal and federally-aided capital improvement programs; and
(3) Third, a permanent strengthening of our unemployment compensation system--to maintain for our fellow citizens searching for a job who cannot find it, their purchasing power and their living standards without constant resort--as we have seen in recent years by the Congress and the Administrations--to temporary supplements.
If we enact this six-part program, we can show the whole world that a free economy need not be an unstable economy--that a free system need not leave men unemployed--and that a free society is not only the most productive but the most stable form of organization yet fashioned by man.
II. FIGHTING INFLATION
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;
(2) Second, passage of the tax reforms previously urged, to remove unwarranted tax preferences, and to apply to dividends