firUF MICHIGAN DAILY

PAGE Z

1L 1959

..11 T UTI1RAN UAY1fILVPAE

resident

Spotlights

Tax

Revision in Annual Tall

:

. (EiTOR' sNOTE Followingare
exepsfrom the State of the Union
address given before Congress yester-
day by president Dwight D. Eisen-
bower.)
Mr. President, Mr. Speaker,
members of the 86th Congress,
my fellow citlzens:
This is the moment when Con-
gress and the executive annually
begin their cooperative work to
build a better America.
One basic opportunity unites
us: To promote strength and se-
curity, side by side with liberty
and opportunity
As we meet today, in the 170th
year of the republic, our nation
must L.ontinue to provide-as all
other free governments have had
to do throughout time-a satis-
factory answer to a question as
old as history. It is: Can govern-
ment based upon liberty and the
God-given rights of man, per-
manently endure when ceaselessly
challenged by a dictatorship, hos-
tile to our mode of life, and
controlling an economic and mili-
tary power of great and growing
strength?
Leadership Recognized
For us the answer has always
been found, and is still found in
the devotion, the courage and the
fortitude of our people.
Moreover, this challenge we face,
niot as a single powerful nation,
but as one that has in recent
decades reached a position of rec-
Ognized leadership in the free
world.
We have arrived at this position
of leadership in an era of remark-
:able productivity and growth. It is
also a time when man's powertof
mass destruction has reached fear-
ful proportions.
Possession of such capabilities
helps create world suspicion and
tension.
We, on our part, know that we
seek only a just peace for all, with.
aggressive designs against no one.
We cannot build peace through
desire alone,
Disregard Agreements
Moreover, we have learned the
bitter lesson that international
agreements, historically considered
by us as sacred, are regarded in
COmmnunist doctrine and In prac-
tice to be mere scraps of paper.
The most recent proof of their
disdain of International obliga-
tions, solemnly undertaken, Is their
announced Intention to abandon
their responsibilities respecting
As a consequence, we can have
no ponfidence in any treaty to
which Communists are a party ev-
cept where such a treaty provides
within itself for self-enforcing
mechanisms Indeed, the demon-
;trated regard of the Communists
of er own pledges is one of the
greatest obstacles to success in
substttLing the rule of law for
rule force.
Yet step by step we must
strengthen the institutions of
peace-a peace that rests upon
justice-a peace that depends up-
on a deep knowledge and clear
understanding by all peoples of the
consequences of failure In this
great purpose.
Prevent War
To achieve this peace we seek
to prevent war at any place and
in any dimension. If, despite our
best efforts, a local dispute should
flare into armed hostilities, the
next problem would be to keep
the conflict from spreading, and
so compromising freedom.
In support of these objectives
we maintain forces of great power
and flexibility.
Our formidable air striking
forces are a powerful deterrent to
general war. Large and growing
portions of these units can depart
from their bases in a matter of
minutes.
Similar forces are included In
our naval fleets.
Rocketry Advances
The Atlas intercontinental bal-

listic missile program has been
marked by rapid development as
evidenced by recent successful
tests. Missile training units have
been established and launching
sites are far along in construc-
tion.
New aircraft that fly at twice
the speed of sound are entering
our squadrons.
We have successfully placed five
satellites in orbit, which have
gathered information of scientific
importance never before available.
Our latest satellite illustrates our
steady advance in rocketry and
foreshadows new developments in
worldwide communications.
Warning systems constantly im-
prove.
Our atomic submarines have
shattered endurance records and
made historic voyages under the
north polar sea.
Defense Reorganization
All this is given only as a matter,
of history; as a record of our
progress in space and ballistic mis-
sile fields in no more than four
years of intensive effort. At the
same time we clearly recognize
that some of the Soviet accom-
plishments in this particular tech-

greater developments preoccupy
the major portion of the nation's
scientists. But we must remember
that these imposing armaments
are purchased at great cost.
Security Costs
National security programs ac-
count for nearly 6 per cent of the
entire federal budget for this com-
ing fiscal year.
Modern weapons are exceedingly
expensive.
The over-all cost of introducing
Atlas into our armed forces will
average $35 million per missile on
the firing line.
This year we are investing an
aggregate of close to $7 billion in
missile programs alone.
Other billions go for research,
development, test and evaluation
of new weapons systems.
Our latest atomic submarines
will cost $5 millions each, while
some special types will cost three
times as much.
We are now ordering fighter
aircraft which are priced at 50
times as much as the fighters of
World War II.
We are buying certain bombers
that cost their weight in gold.
These sums are tremendous,
even when compared with marve-
lous resiliency and capacity of our
economy.
Such expenditures demand both
balance and perspective in our
planning for defense. At every
turn, we must weigh, judge and
select. Needless duplication of
weapons and forces must be
avoided.
Avoid Extremes
We must guard against feverish
building of vast armaments to
meet glibly predicted moments of
so-called "maximum peril."
The threatwe face is not spor-
adic or dated; it is continuous.
Hence we must not be swayed in
our calculations either by ground-
less fear or by complacency.
We must avoid extremes, for
vacillation between extremes is
inefficient, costly, and destructive
to morale.
In these days of unceasing tech-
nological advance, we must plan
our defense expenditures syste-
matically and with care, fully rec-
ognizing that obsolescence compels
the never-ending replacement of
older weapons with new ones.
The defense budget for the com-
ing year has been planned on the
basis of these principles and con-
siderations. Over these many
months I have personally partici-
pated in its development.
The aim is a sensible posture of
defense. The secondary aim is
increased efficiency and avoidance
of waste. Both are advanced by
this budgetary plan.
Collective Security
Our own vast strength is only
a part of that required for de-
pendable security. Because of this
we have joined with nearly 50
other nations in collective security
arrangements.
In these common undertakings
each nation is expected to contrib-
ute what it can in sharing the
heavy load. Each supplies part of a
strategic deployment to protect
the forward boundaries of free-
dom.,
Constantly we seek new ways
to make more effective our con-
tribution to this system of collec-
tive security.
Recently I have asked a com-
mittee of eminent Americans of
both parties to reappraise our
military assistance programs and
the relative emphasis which should
be placed on military and economic
aid.
I am hopeful that preliminary
recommendation of this commit-
tee will be available in time to
assist in shaping the mutual se-
curity program for the coming fis-
cal year.
Expanding Economy
The material foundation of our
national safety is a strong and

expanding economy. This we have
-and this we must maintain. Only
with such an economy can we be
secure and simultaneously provide
for the well-being of our people.
A year ago the nation was ex-
periencing a decline in employ-
ment and output. Today that re-
cession is fading into history, and
this without gigantic, hastily im-
provised public works projects or
untimely tax reductions.
The marked forward thrust of
our economy reaffirms our confi-
dence in competitive enterprise.
But - clearly - wisdom and pru-
dence in both the public and pri-
vate sectors of the economy are
always necessary.
Outlook for Future
Our outlook is this: 1960 com-
mitments for our armed forces.
The Atomic Energy Commission
and military assistance exceed 47
billion dollars. In the foreseeable
future they are not likely to be
significantly lower. With an an-
nual population increase of three1
million, other governmental costs
are bound to mount.
Next year we will be spending
increased amounts on health pro-
grams: on federal assistance to

PRESIDENT EISENHOWER-In his State of the Union address
before Congress yesterday, the President suggested a revision of
the nation's tax structure to remov inequalities and to enhance
incentives for all Americans to work, to save and to invest. He
also urged that war be prevented in any place and dimension. In
support of these objectives, President Eisenhower said, "We
maintain forces of great power and flexibility." He then added,
"We shall constantly seek meaningful agreements to settle the
Berlin problem and others knowing the integrity of all free peoples

is at stake,"
life and territory. It is the preser-
vation of a. way of life.
We must meet the world chal-
lenge and at the same time permit
no stagnation in America.
Unless we progress, we regress.
We can successfully sustain
security and remain true to our
heritage of freedom if we clearly
visualize the tasks ahead and set
out to perform them with resolu-
tion and fervor. We must first
define these tasks and then under-
stand what we must do to perform
them.
Define Goals
To define these goals, I intend
to mobilize help from every avail-
able source.
We need more than politically
ordained national objectives to
challenge the best efforts of free
men and women.
A group of selfless and devoted
individuals, outside of govern-
ment, could effectively participate
in making the necessary appraisal
of the potentials of our future.
The result would be established
national goals that would not only
reflect the brightness of our finest
dreams, but would meet the stern
test of practicality.
I plan a committee comprised of
educators and representatives of
labor, management, finance, the
professions and every other kind
of useful activity.
Such a study would update and
supplement, in the light of contin-
uous changes in our society and its
economy, the monumental work of
the committee on recent social
trends which was appointed in
1931 by President Hoover.
The new committee would be
concerned, among other things,
with the living standards of our
people, their health and education,
their better assurance of life and
liberty and their greater oppor-
tunities,
It would also be concerned with
methods to meet such goals and
what levels of government-local,
state, or federal-should be par-
ticularly concerned.
Fiscal Integrity
Such studies would be helpful, I
believe, to government at all levels
and to all individuals. The goals so
established could help us see our
current needs in perspective. They
will spur progress.
We do not forget, of course, that
our nation's progress and fiscal
integrity are interdependent and
inseparable. We can afford every-
thing we clearly need, but we
cannot afford one cent of waste.
We must examine every item of
governmental expense critically.
To do otherwise would betray our
nation's future.
We must avoid any contribution
to inflationary processes, which
could disrupt sound growth in our
economy.
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The Constitution entrusts the
executive with many functions,
but the Congress-and the Con-
gress alone-has the power of the
purse. Ultimately upon Congress
rests responsibility for determining
the scope and amount of federal
spending.
By working together, the Con-
gress and the executive can keep
a balance between income and out-
go. If this is done there is real
hope that we can look forward to
a time in the foreseeable future
when needed tax reforms can be
accomplished.
Tax Revisions
In this hope, I am requesting
the secretary of the treasury to
prepare appropriate proposals for
revising, at the proper time, our
tax structure, to remove inequities
and enhance incentives for all
Americans to work, to save, and to
invest. Such recommendations will
be made as soon as our fiscal con-
ditions permit. These prospects
will be brightened if 1960 expen-
ditures do not exceed the levels
recommended.
Second, I shall recommend to
the Congress that the Chief Ex-
ecutive be given the responsibility
to approve or to veto specific items'
in appropriations and authoriza-
tion bills. This would save tax
dollars,
Third, to reduce federal opera-
tions in an area where private
enterprise can do the job, I shall
recommend legislation for greater
flexibility in extending federal
credit, and in improving the pro-
cedures under which private
credits are insured or guaran-
teed. Present practices have need-
lessly added large sums to federal
expenditures.
Fourth, action is required to
make more effective use of the
large federal expenditures for ag-
riculture and to achieve greater
fiscal control in this area.
Outlays of the Department of
Agriculture for the current fiscal
year for the support of farm
prices on a very few farm pro-
ducts, will exceed $5 billion. That
is a sum equal to approximately
two-fifths of the net income of all
farm operators in the entire
United States.
Farm Surplus Revision
By the end of this fiscal year it
is estimated that there will be in
government hands surplus' farm
products worth about $9 billion.
And by July 1, 1959, government
expenditures for storage, interest,
and handling of its agriculture in-
ventory will reach a rate of $1
billion a year.
This level of expenditure for
farm products could be made
willingly for a temporary period if
it were leading to a sound solution
of the problem. But unfortunately
this is not true. We need new
legislation.
In the past I have sent messages
to the Congress requesting greater
freedom for our farmers to man-
age their own farms and greater
freedom for markets to reflect the
wishes of producers and consum-
ers. Legislative changes that fol-
lowed were appropriate in direc-
tion but did not go far enough,.
The situation calls for prompt
and forthright action. Recom-
mendation for action will be con-
tained in a message to be trans-
mitted to the Congress shortly.

will help create an environment of
price stability for economic growth.
However, certain additional meas-
ures are needed.
I shall ask Congress to amend
the employment act of 1946 to
make it clear that government
intends to use all appropriate'
means to protect the buying power
of the dollar.
I am establishing a continuing
cabinet group on price stability for
economic growth to study govern-
mental and private policies affect-
ing costs, prices, and economic
growth. It will strive also to build
a better public understanding of
the conditions necessary for main-'
taining growth and price stability.
Studies are being undertaken to:
improve our information on prices,
wages, and productivity.
International Status
I take up next certain aspects
of our international situation and
our programs to strengthen it.
America's security can be as-
sured only within a world com-
munity of strong, stable, indepen-
dent nations, in which the con-
cepts of freedom, justice ani hu-
man dignity can flourish.
There can be no such thing as
Fortress America. If ever we were
reduced to the isolation implied
by that term, we would occupy
the prison, not a fortress.
The question whether we can
afford to help other nations that
want to defend their freedom but
cannot fully do so frometheir own
means, has only one answer: We
can and we must, we have been
doing so since 1947.

These fiscal and related actions

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Peaceful Goals
Our foreign policy has long been
dedicated to building a perman-
ent and just peace.
During the past six years our
free world security arrangements
have been bolstered and the bonds
of freedom have been more closely
knit. Our friends in Western Eu-'
rope are experiencing new internal
vitality, and are increasingly morej
able to resist external threats.
Acting with other free nations
we have undertaken the solemn
obligation to defend the people of
free Berlin against any effort to
destroy their freedom.
In the meantime we shall con-
stantly seek meaningful agree-
ments to settle this and other
problems, knowing full well that
not only the integrity of a single

city but the hope of all f
peoples is at stake
We need, likewise, to contir
helping to build the economic h
so essential to the free worl
stability and strength,
The International Monett
Fund and the World Bank ht
both fully proved their worth
instruments of international
nancial cooperation.
Their executive directors hl
recommended an increase in ec
member country's subscription
am requesting the Congress
immediate approval of our sh
of these increases.
We are now negotiating w
representatives of the 20 La
American republics for the cr
tion of an inter-American finE
cial institution.

Prices have displayed a welcome
stability in recent months and, if
we are wise and resolute, we will
not tolerate inflation in the years
to come. But history makes clear
the risks inherent in any failure to
deal firmly with the basic causes
of inflation. Two of the most im-
portant of these causes are the
wage-price spiral and continued
deficit financing.
Inflationary Effects
Inflation would reduce job op-
portunities, price us out of world
markets, shrink the value of sav-
ings and penalize the thrift so
essential to fiinance a growing
economy.
Inflation can be prevented. But
this demands statesmanship on
thee part of business and labor
leaders and of government at all
levels,
We must encourage the self-
discipline, the restraint necessary
to curb the wage-price spiral and
we must meet current costs from
current revenue.
To minimize the danger of future
soaring prices and to keep our
economy sound and expanding, I
shall present to the Congress cer-
tain proposals.
First, I shall submit a balanced
budget for the next fiscal year, a
year expected to be the most
prosperous in our history. It is a
realistic budget with wholly at-
tainable objectives.
If we cannot live within our
means during such a time of rising
prosperity, we help make it diffi-
cult for every family in our land
to do so. But to live within our
means would be a tangible demon-
stration of the self-discipline help-
ful in assuring a stable dollar.

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