davidaulloa/AmericanStories huggingface dataset:
Evening star., 1962-01-22
u. S. SPENDABLE
INCOME AVERAGE
PASSES $1,000
By the Associat ted Press

BY the Associated Press
The per capita spend
able income of Americans
topped the $4,000 mark last
fall, President Kennedy re-
ported today.
Total personal income,
after taxes. rose by $21
billion from the depressed
first quarter of 1861 to a
record $375.6 billion annual
rate in the last quarter.
That represented a $92
increase for each man,
woman and child-from
$1,940 a year to $2,O32, Mr..
Kennedy told Congress in
his economic message.
"Since consumer prices
rose by only "a of l per
cent, these gains in income
were almost entirely gains
in real purchasing power"
Mr.. Kennedy said.
Evening star., 1962-01-22

= 10 CHe congress OF CIle OIllCeQ
States:
I report to you under the
provisions Of the Employment
Act of 1916 at q time when
The economy has regained
its momentum;
The economy is responding
to the Federal Governments
efforts, under the act, Ito pro-
mote maximum employment,
production. and purchasing
power;
The economy is again NOV
ing toward the central objective
of the act-to afford useful
employment opportunities, in
Guiding self-employment, for
those able, willing, and seeking
to work."
My first economic report is
an appropriate occasion to re-
emphasize my dedication to the
principles of the employment
act. :.
Though the postwar record is
free of major depression, it is
marred by four receSsions. {.
To combat future receSsions
to keep them short and shall
low if they occur-I urge adop-
tion of a three-part program
for sustained prosperity, which
will Cd provide standby pow
er, subject to congressional
veto. for temporary income tax
reductions, (2) set up a stand
by program of public capital
improve ents, and 90
strengthen the unemployment
insurance system,
Evening star., 1962-01-22
ECONOMIC
Drop in Unemployment
Seen in Next 7 Years

against Federal Reserve notes
and deposits.
Mr.. Kennedy said he has di-
rected inter-agency groups to
study several other proposals
by the CMC on regulation OF
banks and other questions. The
CMC was the main inspiration
for the Presidents plan for
temporary tax cuts and accel-
Grated public works spending in
recesSions.
The President said he will
submit later this year, for con-
gressional action in 1868, a
broad tax reform program
"aimed at the simplification of
our tax structure, the equal
treatment of equally situated
persons and the strengthening
Of incentives for individual ef-
fort and productive invest
ment."
Different Approach
This program is expected to
include proposals for elimina-
tion of some tax deductions and
preferences, with reduction OF
rates on the enlarged pool OF
taxable income.
The President and the council
took a much different approach
than did the Eisenhower ad-
ministration in writing the
report. Unlike his predecessor
Mr.. Kennedy interprets the EN-
ployment Act of 1946, which
established the council, as re-
quiring the administration tc
set specific goals for maximum
employment, production and
purchasing power"
In addition to setting goals
and building economic mod.
els," the Kennedy council wrote
a treatise on the administra
tion's economic philosophy.
Reviewing his first year ir
office, the President said the
1861 recovery from the reces.
sion demonstrated again the
resiliency of the United State.
economy with well-timed sup.
port from Government policy.
The report emphasized thu
administrators estimate thai
the economy was producing
goods and services at an an,
nual rate $51 billion below it,
potential in the first quartel
Of 1861 and that the amount O.
slack" had shrunk to $28 bill.
lion by the fourth quarter.
Expansion Encouraged
While working to close tn
gap between current potentia
and actual output, the repor
said, the Nation also must pusl
to accelerate expansion of DO
tential production capacity.
1t called for tax and othel
policies to encourage private
investment, upgrading o.
workers skills, public and pri.
vate development of resources
expanded chronological re.
search and development, in,
craesed public services anc
sharpening Of competitive eff,
cheney through antitrust en-.
forcement, tariff reductions
improved labor mobility anc
other measures.
Since the economy still i.
operating below its present ca.
pacity, the report said, there i!
little danger that the upturr
will result in the kind of in
flation caused by excessive pur-
chasing power straining poten-
tial production.
Concern Expressed
So long as initiation is helc
at bay, the report urged, the
Federal Reserve Board should
Evening star., 1962-01-22

continue its generally easy
money policies.
But the report did express
concern over the kind of infla-
tion caused when strong COM
panies and unions obtain ex-
cessive price and wage increases
through their market power"
regardless of supply and de-
mand.
Productivity as measured by
output per man-hour is a good
approximate guide to non-in-
flationary wage and price de-
mands, the report said, al
though special circumstances
and considerations of equity
may justify modification of
the guideline up or down.
AS applied to wages and
fringe benefits, council mem
bers indicated at a news con-
ference, the guide would allow
wage increases of roughly 8
per cent annually in normal
cases.
Since output per man-hour
throughout the economy has
increased by about 3 per cent
annually in recent years, &C
cording to this theory, wage
and benefit boosts of that de-
gree would not raise labor
costs per unit of production.
Price Policy Suggested
In industries with produc-
tivity records in line with the
national average, the report
said, prices generally should
remain stable. If an industry's
productivity rises faster than
the average, it should cut
prices, the report continued,
and an industry with tagging
productivity can raise prices
without causing initiation.
While avoiding any Sugges-
ton of a hard-and-fast rule,
the President was trying to
mobilize public opinion to exert
pressure on labor and manage
ment in key industries.
Apparently addressing him
self primarily to the steel in
duStry, the President said:
IF labor leaders in our ma
jor industries will accept the
productivity benchmark as a
guide to wage objectives, and
if management in these indus
tries will practice equivalent
restraint in their price deci-
sions, the year ahead will be
a brilliant chapter in the rec
ord of the responsible exercise
of freedom"
Evening star., 1962-01-22
Goals of
Economic Policy

Though we may take salts
faction with our progress to
date, we dare not rest content.
The unfinished business of eco
nomic policy includes % the
achievement of full employ
ment and sustained prosperity
without initiation, (2) the &C
celeration Of economic growth,
90 the extension of equality of
opportunity, and "a the res
toration of balance of payments
equilibrium. -.
Our goal of full and sustained
prosperity without initiation.
Recovery has carried the
economy only part of the way
to the goal Of maximum pro-
duction, employment, and pur-
chasing power" The standing
challenge Of the employment
act is not merely to do better,
but to do our beSt-the maxi
num-" Attainment of that
maximum in 1868 would mean
a GIMP Of approximately $500
billion, wages and salaries of
over 1929 billion, and corpor-
ate profits of as much as $50
billion, all in 1861 prices.
Involuntary unemployment is
the most dramatic sign and dis
heartening consequence of un-
Identification of productive ca
pacity. We cannot afford
to settle for any prescribed level
of unemployment. But for
working purposes we view a
percent unemployment rate as
a temporary target. It can be
achieved in 1868, if appropri-
ate fiscal, monetary, and other
policies are used. -.
We must seek full recovery
without endangering the price
stability of the last 4 years
The experience of the past veal
has shown that expansion with
out initiation is possible. =.
The task of economic stabili-
zation does not end with the
achievement of full recovery
There remains the problem OF
keeping the economy from
straying too far above or below
the path Of steady high en-
ployment.
Our Goal Of Economic Growth
While we move toward full
and sustained use of today's
productive capacity, we must
expand our potential for to-
morrow. Our postwar economic
growth-though a step ahead Of
our record for the last half
century - has been slowing
down. We have not in recent
years maintained the 4 to AZ
per cent growth rate which
characterized the early post
Evening star., 1962-01-22

in four out of six months) and
(B) Had risen to a level at
least one percentage point
higher than its level four
months Cor six months) earlier.
co Before invoking this au-
thority, the President must
make a finding that current
and prospective economic de-
velopments require such action
to achieve the objectives of
the employment act.
90 Upon such finding, the
President would be authorized
to commit
(A) Up to $3.50 million in
the acceleration of direct Fed
eral expenditures previously au-
thorized by the Congress,
OBJ Up to $3.50 million for
grants-in-aid to State and
local governments,
(C) Up to $3.50 million in
loans to States and localities
which would otherwise be un-
able to meet their share of
project costs, and
Cd Up to $3.50 million addi-
tional to be distributed among
the above three categories as
he might deem appropriate.
"a The authority to initiate
new projects under the capital
Improvements program would
terminate automatically within
IL months unless extended by
the CongreSs-but the program
could be terminated at any
time by the President.
(5) GrantS-in-aid would be
made under rules prescribed
by the President to assure that
assisted projects
(A) Were of high priority,
(B) Represented a net addi-
tion to existing State and local
expenditures, and
(C) Could be started and
completed quickly.
CO Expenditures on Federal
projects previously authorized
by the Congress would include
resource conservation and va
rious Federal public works, in
cluding construction, repair,
and modernization of public
buildings.
CD After the program had
terminated, the authority
would not again be available
to the President for six months.
The first impact of the ac-
celerated orders, contracts, and
outlays under the program
would be felt within one to two
Evening star., 1962-01-22

war period. We should not
settle for less than the achieve
ment Of a long-term growth
rate matching the early post
war record. Increasing our
growth rate to AZ per cent a
year lies within the range of
our capabilities during the
1960S.
Our Goal of Equal Opportunity
Increasing in our lifetime,
American prosperity has been
widely shared and it must con-
tinue so. The spread of primary,
secondary and higher educa-
ton, the wider availability of
medical services, and the i'm
proved postwar performance of
our economy have bettered the
economic status of the poorest
families and individuals.
But prosperity has not wiped
out poverty. In 1860. z million
families and individuals had
personal incomes lower than
$4,000. In part, our failure to
overcome poverty is a conse-
quence of our failure to operate
the economy at potential. . .
-. Legislative proposals now
pending will be particularly eff
fective in improving the lot of
the least fortunate. These in
clude Cd health insurance for
the aged, financed through the
social security system, (2) Fed
eral aid for training and re-
training our unemployed and
underemployed workers, 90 the
permanent strengthening or our
unemployment compensa t o n
system, and a. substantial re-
vision in our public welfare
and assistance program, stress
ing rehabilitation services which
help to restore families to in
dependence.
Public education has been the
great bulwark of equality OF op-
portunity in our democracy for
more than a century. For
this reason, I urge action by
the congress to provide Federal
aid for more adequate public
school facilities, higher teach
ers' salaries, and better quality
in education. I urge early COM
pletion Of congressional action
on the bill to authorize loans
for construction of college aca-
demic facilities and to provide
scholarships for able students
who need help.
Our Goal of Basic Balance
in International Payments
Persistent international pay
ments deficits and gold out
flows have made the balance
of payments a critical problem
of economic policy. We must
attain a balance in our inter-
national transactions which
permits us to meet heavy obli-
cations abroad for the security
and development of the free
world, without continued de-
pletion of our gold reserves or
excessive accumulation OF
Short-term dollar liabilities to
foreigners. simultaneously, we
must continue to reduce bar
riers to international trade and
to increase the flow of resources
from developed to developing
countries.
Evening star., 1962-01-22
Strengthening Our
Tax System

The tax system of the United
States has consequences far
beyond the simple raising of
revenue. The tax laws are a
vital part of the economic
environment; their effects NAV
be equitable or inequitable:
they create incentives which
may help or handicpa the
national interest. We cannot
safely ignore these important
effects in the comforting illu-
sion that what already exists
is perfect. We must scrutinize
our tax system carefully to in
sure that it's provisions con-
tribute to the broad goals of
full employment, growth. and
equity
IL urge the earliest possible
enactment of tax proposals now
before the House Committee
on Ways and Means. The cen
ter piece of these proposals is
the 8 per cent tax credit
against tax for gross invest
ment in depreciable machinery
and equipment. The credit
should be retroactive to Janu-
airy /, 1862. .
.. My other proposals for
tax reform are designed to i'm
prove the equity and efficiency
Of the tax system and will off
set the remaining net revenue
loss:
Cd Extension of the with
holding principle to dividend
and interest income;
(2) Repeal Of the $50 divi-
dend exclusion and the 4 per
cent dividend credit;
90 Revision of the tax
treatment of business deduc-
tions for entertainment. gifts,
and other expenses, to stop
abuses of "expense-account
living;
a. Elimination of the spe-
cial tax preference for capital
gains from the sale Of depre-
ciable property, real and per-
sonal;
(5) Removal Of unwarranted
preferences (a) To co-opera-
tives, (b) To mutual fire and
casualty insurance companies,
and Co To mutual savings
banks and savings and loan as
sociations, and
(6) Revision Of the tax treat
ment of foreign income, to re-
move defects and inequities in
the law. Removal Of the un-
warranted incentive to the
export of capital will be con-
sistent with the efficient dis
tribution of capital resources in
the world and will aid our
balance of payments position.
In addition, I recommend
that the corporate income tax
and certain excise taxes again
be extended at present levels
for another year beyond June
80, 1862, except that the struc-
ture of taxes and user charges
in the transportation field be
altered as proposed in my
budget message.
The momentum of our econ
omy has been restored. This
momentum must be main
tained, if the full potential of
our free economy is to be re-
leased in the service Of the Ma
ton and the world. In this
undertaking. I ask the support
of the Congress and the Ameri-
can people. !
Evening star., 1962-01-22
PROGRESS IN 1861

Last January the economy
was in the grip of recession,
Nearly 7 per cent Of the labor
force was unemployed. Almost
one-fifth of manufacturing ca
pacity lay idle. Actual output
was running $50 billion (an-
nual rate) short of the econ
omy's great potential. These
figures reflected not only the
setback of 1960-61 but the in
complete recovery from the re-
cession Of 1878. The task
before us was to recover not
from one but from two recess
SionS.
These five aims for 1861
have been achieved:
% The downtrend was re-
versed. Gross National Prod
uct (GNP) grew from $5O1
billion (annual rate) in the
first quarter to a record rate
of $542 billion in the last quar-
ter. In July, industrial pro-
duction regained its previous
peak, and by the end of the
year 1t showed a total rise OF
Is per cent.
CD These gains brought into
productive use nearly half the
plant capacity which was idle
at the beginning of the year.
90 Unemployment dropped
from 6.8 to 81 per cent of the
labor force. The number of
areas of substantial labor sur
plus declined from 1O1 in
March to so in December.
% Price stability has been
maintained during the re-
covery. Since February, whole
sale prices have fallen slightly,
and consumer prices have risen
only one-half of / per cent.
60 Confidence in the dollar
has been restored. Our gold
losses were cut from SIT bill
lion in 1860 to less than $O.9
in 1861. The deficit in 1861 in
basic international transactions
was about one-thrd as large as
in 1860.
AS 1861 ended, actual output
was still $25 to $50 billion short
of potential, and unemploy-
ment was far too high. -.
Evening star., 1962-01-22
ECONOMIC
Continued From Page Al

| COnt1nue0 FROM rage Al
stantial economic downtown
Mr.. Heller told a news confer
ence the President would not
hesitate to ask for a tax in.
crease" if initiation became 9
strong threat.
To counter either initiation
or recession, the report said
the administration will rely
heavily on budget adjustments
In case of initiation, Govern
ment spending would slow
down and revenues would rise
to soak up excess private
purchasing power. Recessions
would call forth converse meas
ureS.
The report explained in de-
tail the three proposals of the
budget message for legis-
lation aimed at moderating
future recessions. The Presi-
dent wants:
/. Standby authority, subject
to veto by Congress, to cut per-
sonal income tax rates in ali
brackets by up to 5 per cent
for six months if he believes
a recession is looming. A five
point cut for six months would
reduce the tax take by about
SIS billion, increasing consumer
purchasing power.
2. Sta n d by authority, moi
subject to congressional veto, tc
spend So billion on Federal
State and local public works
if unemployment rates rise by
specified percentages.
8. Legislation to extend un-
employment compensation pay.
mentS to jobless workers who
exhaust their regular benefit
rights, establish Federal stand.
ards to increase the benefit:
paid by the States, extend GOV.
erage to three million worker!
who now are excluded, increase
the payroll tax levied on EN-.
ployers, aid States hit by heavy
unemployment benefit claims
and continue jobless pay tt
persons taking approved train.
ing courses.
Other Requests
In other proposals, the Presi
dent asked Congress to:
], Act quickly on pending tai
legislation, the main feature o
(which is an 8 per cent ia,
, credit to encourage investmen
in modern factory equipment
Il Establish a retraining pro
gram for unemployed worker
and a program for "youtl
employment opport unities
through training, public serv
ice" jobs and Youth Corp
, Conservation camps.
Allow a President to choos
a new chairman of the Fedora
Reserve Board at the start q
each presidential term, by elm
mating the present overlapping
term system.
Withdraw the price floo
under silver and take othe
steps to end use Of silver a.
, backing for currency.
Study Is Urged
While not specifically re
queSting legislation, the Presi
dent urged Congress to stud,
/ last years proposals by tn,
Commission on Money ant
! Credit, a private group, tt
, eliminate the ceiling on tn
, public debt, to repeal the ~
: per cent debt ceiling OF
5 coupon interest rates thu
Treasury may pay on securitie
: maturing In five or more year
and to remove the requirement
: for a Is per cent gold reserve
Evening star., 1962-01-22
Strengthening the
Financial System


on money and credit. The re-
port of the commission on
money and credit, published
last year, raises important
issues of public policy relating
to Cd the objectiveS and ma
chinery of Government for
economic stabilization and
(2) Federal direct
lending and credit guarantee
program, and 90 the structure
and regulation of private fl
nancial institutions and mar
kets the subjects covered
by the commission cantor the
purposes of discussion and ac-
ton in the Government-use-
fully be divided into four cate
gorieS.
Cd To strengthen the in
struments of policy for eco-
nomic stabilization, the COM
mission recommends perman-
ent improvement of unemploy-
ment compensation, flexibility
in Government capital expendi-
lures, and flexibility in adjust
ing the basic Federal individual
income tax rate -.
CD In its comprehensive new
look existing financial legiSla-
ton, the commission concludes
that the following financial
restrictions no longer serve the
purposes originally intended
and unnecessarily complicate
or obstruct other Government
policies: The ceiling on the
public debt, the ceiling on per-
missible interest rates on
United States Treasury depos-
its. I am sure that the Con-
gresS will wish to examine
carefully the commissions
recommendations on these
points.
90 The commission re-ex-
amines the structure of the
Federal Reserve System and its
relationship to other arms of
the Federal Government
There are two reforms of
clear merit on which there ap-
pears to be sufficiently general
agreement to proceed at once,
and which are direct concern
to the President in the exercise
of his responsibility to appoint
the members and officers of
the board of governors of the
Federal Reserve System.
The first is to give adequate
recognition in the simple mat
ter of salaries to the important
responsibilities of the board of
governors of the Federal Re-
serve System ...
The second is to revise the
terms of the officers and men,
bers of the board so that a new
president will be able to nomi-
nate a chairman of his choice
for a term of four years coter-
minous with his own. :.
Provision should be made
now for smooth transition to
new arrangements to take
effect in 1865. :.
a. Several of the commits
sion's accommodations require
careful appraisal by the af-
fected agencies in the executive
branch as a basis for future
legislative recommendations:
(A) Banks and other private
financial institutions: The COM
mission proposes significant
changes in the scope and nature
of government regulations con-
cerning reserves, portfolios, in
tereSt rates, and competition. .
(B) Federal lending and loan
guarantee programs: 1t is
clearly time for a thorough re-
view of both their general i'm
pact on the economy and their
effectiveness for the special
purposes for which they were
established.
Co Corporate pension funds
and other private retirement
programs: 1t is time for a
reappraisal of legislation gov
erning these programs.
A Revision of Silver Policy.
Silver "A sick metal in the
1930's-!s today an important
raw material for which indus