davidaulloa/AmericanStories huggingface dataset:
Evening star., 1963-01-21
BuIunce in Use
Of Scientific SkiIIs

Tax reduction will remove an
obstacle to the full development
of the forces of growth in a
free economy. To go further,
public policy must offer posi-
tive support TO the primary
sources of economic energy. .
The Federal Government is
already the main source of fin
ancial support for research and
development in the United
States. But in the course Of
meeting specific challenges so
brilliantly, we have paid a price
by sharply limiting the scarce
scientific and engineering re-
sources available to the civilian
sectors Of the American econ
Tomy.
Since rising productivity is a
major source of economic
growth, and research and de-
velopment are essential sources
of productivity growth. I be-
lieve that the Federal Govern
ment must now begin to re-
dress the balance in the use of
scientific skills. To this end
/ shall propose a number of
measures to encourage civilian
research and development and
to make the byproducts of mil
itary and space research easily
accessible to civilian industry.
These measures will include:
/. Development of a Federal
State engineering extension
service;
2. New means of facilitating
the use by civilian industry Of
the results of Government
financed research;
8. Selected support of in
dustrial research and develop
ment and technical informa-
ton services;
4. Support Of industry re-
search associations;
5. Adjustment of income tax
laws to give business firms an
additional stimulus to invest in
research equipment;
6. Stimulus of university
training of industrial research
personnel.
Evening star., 1963-01-21
BY the Associated Press

FOLLOWING is a partial tert
OF President Kennedy'S an
nuGI economic message to
Congress today:
For all its advances the Ma
tion is still falling substantially
short of its economic potential
"a potential we must fulfill
both to raise our standards OF
well-being at home and to serve
the cause of freedom abroad.
A balanced appraisal of our
economy, then, necessarily
couples pride in our achieve
ments with a sense of chal-
lenge to master the job as yet
undone. No nation, least of all
ours, can rest easy.
We cannot now reclaim the
opportunities we lost in the
past. But we can move forward
to seize the even greater possi-
bilities of the future. The dec
ade ahead presents a most fa-
vorable gathering of forces for
economic progress.
The outlook for continued
moderate expansion in 1868 is
now favorable:
/. Business investment, re-
spending in part to the stim-
illus Of last years depreciation
reform and investment tax
credit and to the prospect of
early tax reduction and reform,
is expected to rise at least
modestly for 1868 as a whole.
2. Home construction should
continue at about its 1862
level.
8. Government purchases
Federal, State and local COM
bined-are expected to rise at
a rate of So billion a quarter
4. Consumer purchase S
should rise in line with gains
in business and Government
activity.
Evening star., 1963-01-21

new jobs, fuller work schedules,
higher profits, and rising farm
incomes, / am proposing a
major reduction in individual
income tax rates. Rates should
be cut in three stages, from
their present range of 20 to 81
per cent to the more reason
able range of IA to 65 per cent.
In the first stage, beginning
July /, these rate reductions
will cut individual liabilities at
an annual rate of $6 billion.
Most of this would translate
Immediately into greater take
home pay through a reduction
in the basic withholding rate.
Further rate reductions
would apply to 1864 and 1865
incomes, with resulting revenue
losses to be partially offset by
tax reforms, thus applying a
substantial additional boost to
consumer markets.
These revisions would di-
rectly increase the annual rate
of disposable after-tax incomes
of American households by
about So billion in the second
half of 1868, and some So bill
lion when the program is in
full effect, with account taken
of both tax reductions and tax
reform. Taxpayers in all
brackets would benefit, with
those in the lower brackets
getting the largest proportional
reductions.
American households as a
whole regularly spend between
81 and "a per cent of the total
after-tax (disposable) incomes
they receive. And they generally
hold to this range even when
income rises and falls; so it
follows that the generally
spend about the same percent
age of dollars of income added
or subtracted.
Evening star., 1963-01-21
Fears of InfIution
Seen Unnecessary

Under our new trade ex-
pansion act, we are prepared
to make the best bargains for
American business that have
been possible in many years.
AS an important part of
our program to increase ex-
ports, I have proposed a sharp
step-up in the export expansion
program of the Department of
Commerce. Funds have been
recommended both to strength
en- our overseas marketing pro-
grams and TO increase the
departments efforts in the
promotion of an expanded in
Evening star., 1963-01-21
Choice of z Kinds
Of Deficit Faces u. S.

And If we were to try to force
budget balance by drastic cuts
in expenditures-neceSsarily at
the expense of defense and
other vital programs-we would
not only endanger the security
of the country. we would so de-
press demand, production and
employment that tax revenues
would fall and leave the Gov
ernment budget still in deficit.
The attempt would thus be
self-defeating.
So until we restore full pros
perity and the budget-balanc-
ing revenues it generates, our
practical choice is not between
deficit and surplus but between
two kinds of deficits: Between
deficits born of waste and
weakness and deficits incurred
as we build our future strength.
AS long as we have large
numbers of workers without
Jobs, and producers without
markets, we will as a Nation
fall into repeated deficits of in
ertia and weakness. But, by
comparison, if we enlarge the
deficit temporarily as the by
product of our positive tax pol
icy to expand our economy this
will serve as a source of
strength, not a sign of weak
ness. 1t will yield rich private
dividends in higher output,
faster growth. more jobs. higher
profits and incomes; and, by
the same token, large public
gain in expanded budget rev.
cues. AS the economy returns
to full employment, the budget
will return to constructive bal
ance.
This would not be true, of
course, if we were currently
straining the limits of our pro-
ductive capacity, when the dol
lars released by tax reduction
would push against unyielding
bottlenecks in industrial plant
and skilled manpower.
Then, tax reduction would be
an open invitation to infla-
ton, to a renewed price-wage
spiral, and would threaten our
hard-won balance of payments
Improvement. Today, however,
we not only have unused man
power and idle plant capacity;
new additions to the labor force
and to plant capacity are con-
stantly enlarging our productive
potential. We have an econ
omy fully able and ready to re-
spond to the stimulus Of tax
radYfafioY1
Evening star., 1963-01-21

program takes hold and gen.
crates pressures on existing
capacity, more and more COM
panies will find the lower taxes
a welcome source of finance
for plant expansion.
The third step toward higher
levels of capital spending is a
combination of structural
changes to remove barriers to
the full flow Of investment
funds, to sharpen the incen-
tives for creative investment,
and to remove tax-induced dis
tortions in resource flow. Re-
duction of the top individual
income tax rate from 81 to 65
per cent is a central part OF
this balanced program.
Evening star., 1963-01-21

Government, where the Nation
is the debtor, the key test is
whether the increase serves to
strengthen or weaken our econ
omy. In terms of jobs and out
put generated without threat
to price stability-and in terms
of the resulting higher reve-
nue-the debt increases fore
seen under my tax program
clearly pass this test.
Evening star., 1963-01-21

and so further boost income
and consumer demand.
In addition, the program
contemplates direct tax reduc-
tions for corporations and for
high-income individuals who
account for most investment.
Corporations TO Benefits
The President proposes TO
keep the corporation tax rate at
So per cent through 1868, all
though he wants to reduce 1t
to AZ per cent by 1865. He dis
closed today his plan to help
small corporations this year.
Corporations now are taxed
30 per cent on the first $25, 900
of profits and So per cent on
profits above S25,000. He pro-
posed to reduce the rate on the
first $4,000 to % per cent,
retroactive to January /, 1868,
while keeping the So per cent
rate above $25,000.
His program calls for re-
ducing individual income tax
rates TO a range of IA to 65
per cent, from the present
range of 20 to 81 per cent.
There would be rate cuts in all
brackets.
Reductions for individuals
would total Sii billion and for
corporations s2.5 billion, after
the final cuts in 1865. About
S3.5 billion Of this $l3.5 billion
revenue loss would be recouped
through tax reforms.
Mr.. Kennedy estimated that
the cuts in individual income
taxes would generate at least
SIC billion Of additional gross
national product, not counting
stimulation Of investment.
Discussing the 1862 record,
the Council disputed the wide
spread theory that last Mays
stock market crash was a ma
jor cause Of the economy's dis
! appointing performance.
Evening star., 1963-01-21

terest in export opportunities
among American firms. 49,.
With responsible and ener-
getic public and private policies,
and continued alertness to any
new dangers, we can move now
to revitalize our domestic
economy without fear of in
flation or unmanageable inter-
national financial problems -
indeed, in the long run, a
healthy balance of payments
position depends on a healthy
economy. -.
The Federal budget has
helped to ease the burdens on
our States and local govern
ments by an expanding pro-
gram of grants for a multitude
of purposes, and inevitably 1t
must continue to do so. The
Federal tax reductions I pro-
pose will also ease these fiscal
burdens, chiefly because greater
prosperity and faster growth
will automatically increa se
State and local tax revenues at
existing rates. -.
Work on the development oi
an acceptable plan for quick
tax action to counter future
recession should continue; with
the close cooperation of the
Congress. it should be possible
! to combine provision for swift
action with full recognition OF
the constitutional role OF the
Congress in taxation. -. l urge
that the Congress appropriate
the balance of funds authorized
for programs under the Public
Works Acceleration Act. Initial
experience under this program
offers promise that rapid tenn
porary acceleration of public
projects at all levels OF Gov
ernment, under a standby pro-
gram, can be an effective
instrument of flexible anti
recession policy. ..
The extension of our Federal
highway system. the further
development of a safe and ef-
ficient system Of airways, the
improvement of our waterways
and harbors, the modernization
and adaptation of mass trans
port systems in our great
metropolitan centers to meet
the expanding and changing
patterns of urban life all
these raise new problems re-
quiring urgent attention.
Among the recommendations
in my transportation message
of April. 1862, were measures
which would provide or en-
courage equal competitive OPP
portunity under diminished
regulation, consistent policies
of taxation and user charges,
and support of urban transpor-
tation and expanded transpor-
tation research. / urge favor
able congressional action on
these measures.
Evening star., 1963-01-21
More Consumer
Spending Urged

If we cut about So billion
from the consumer tax load,
we can reasonably expect a
direct addition to consumer
goods markets of well over 81
billion.
A reduction of corporate
taxes would provide a further
increment to the flow of house
hold incomes as dividends are
enlarged; and this, too, would
directly swell the consumer
spending stream.
The direct effects, large as
they are, would be only the
beginning. Rising output and
employment to meet the new
demands for consumer goods
will generate new income
wages, salaries and profits.
Spending from this extra in
come flow would create more
Jobs, more production and
more incomes. The ultimate
increases in the continuing
flow of incomes, production
and consumption will greatly
exceed the initial amount of
tax reduction.
Even if the tax program had
no influence on investment
spending-either directly or
indirectly-the $3.50 billion
added directly TO the flow of
consumer income would call
forth a flow of at least SIC
billion of added consumer
goods and services.
But the program will also
generate direct and indirect
increases in investment spend
ing. The production of new
machines, and the building OF
new factories. stores, offices,
and apartments add to incomes
in the same way as does pro-
duction Of consumer goods
This too sets off a derived
chain reaction of consumer
spending, adding at least an
other 81 billion Of output OF
consumer goods for every 81
billion of added investment
Evening star., 1963-01-21
Education Frontier
Must Be Widened'

Our educational frontier can
and must still be widened:
Through Improvements in the
quality of education now avail
able, through opening new OPP
portunities so that all can ac-
quire education proportionate
to their abilities, and through
expanding the capacity of an
educational system that in
creaSingly feels the pinch Of
Evening star., 1963-01-21
Time to Remove
Bio Tux Burden

In summary: The recovery
that was initiated shortly after
1 took office two years ago now
stands poised at a moment of
decision. The main block
to full employment is an un-
realistically heavy burden of
taxation. The time has come
to remove it. -.
We approach the issue of tax
revision, not in an atmosphere
of haste and panic brought on
by recession or depression, but
Evening star., 1963-01-21
Doesn't Anticipate
Another Recession

These prospects, taking into
account the proposed tax re-
duction, lead to the projection
of a gross national product
for 1868 of $578 billion, under
stood as the midpoint of a
$40 billion range.
I do not expect a fifth post
war recession to interrupt our
progress in 1868.
1t is not the fear of recession
but the fact of 5 years of ex-
cessive unemployment, unused
capacity, and slack profits
and the consequent hobbling
of our growth rate-that con-
stitutes the urgent case for
tax reduction and reform,
And economic expansion in
1868, at any reasonably pre-
dictable pace, will leave the
economy well below the En-
ployment Acts high standards
of maximum employment. pro-
duction and purchasing power.
Past experience tells us that
only sustained major increases
in production can re-employ
the jobless members Of today's
labor force, create job oppor-
tuities for the 2 million young
men and women entering the
labor market each year, and
produce new jobs as fast as
chronological change destroys
old ones.
The prospective pace of ex-
pansion for 1868 promises little
if any narrowing of the pro-
duction gap until tax reduction
takes hold. Our growing labor
force and steadily rising pro-
ductivity raise our capacity to
produce by more than $40 bill
lion a year. We need to run
Just to keep pace and run
swiftly to gain ground in our
,,aoa - F,,1I utilization
Evening star., 1963-01-21

Continued From Page Al
recession have improved To
about four to one-although
some risk will remain II Con-
gress does not cut taxes.
Mr.. Kennedy emphasized that
he wants tax cuts to promote
long-run growth. not TO give
the economy first aid. He said
"It is not the fear Of reces-
sion but the fact of five years
Of excessive unemployment, un-
used (productive) capacity and
slack profits and the conse-
quent hobbling OF our growth
rate-that constitutes the ur-
gent case for tax reduction and
reform"
He thus tried to answer the
objections Of those in Congress
who oppose tax cuts when the
budget is running big deficits,
unless a recession is under way
or imminent.
Tax Cut Necessary
on the specific issue Of de-
ficits, the President said "fis-
cal prudence and responsibility
call for tax reduction even II
it temporarily enlarges the
Federal deficit"
Tax reduction, he said. "is
the best way open to us To
increase revenues" because the
cuts would stimulate the econ
omy and so ultimately increase
the dollar amount Of the Gov
ernments tax take at lower
rates.
"If we we're 10 slide into
recession through failure Il
act on taxes" he warned, "tht
cash deficit for next yeai
would be larger without the
tax reduction than the esti.
mated deficit with tax redu-
tion (and) could break al
peacetime deficit records"
High taxes are such a heavy
drag on consumer spending anc
business investment. Mr. Ken.
nedy said, that II is difficult
Evening star., 1963-01-21
President Pushes Tax Reduction,
Despite Deficit, as Aid to Growth

for the economy to reach the
level of activity needed to
balance the budget. And he
warned that attempts to bal
ance the budget by reducing
spending - as many conserva-
tives urge-would depress the
economy and so perpetuate de-
ficits.
Price Range Stable
Budget deficits can cause
initiation when the economy is
operating near capacity, the
President said, but not when
unemployment is high and
machines lie idle. He said
prices have been relatively
stable for five years, and
predicted that stability will
continue.
The Council, in q report at
tached TO the Presidents mes
sage. conceded that expansion
Iof the domestic econom y
through tax cuts could cause
some short-term problems for
the campaign to eliminate the
deficit In the United States
balance of international pay
ments.
Imports, which count as deb
It's on the balance payments
ledger, probably would increase,
the Council said.
But the President and the
Council said stimulation Of
economic growth would help
balance international payments
and safeguard the dollar by
attracting investment money
to the United States and boil
stering confidence In the Ma
tion's strength.
Expectations Not Reached
Mr.. Kennedy reported that
| the economy made substantial
gains In 1862, but noted that
the advances fell far short OF
expectations. In last years
Economic Report, he predicted
that unemployment would de-
cline 10 5 per cent or less in
Evening star., 1963-01-21
Urges Major Cuts
In Income Tuxes

In order to enlarge markets
for consumer goods and serv-
ices and translate these into
Evening star., 1963-01-21
CONCLUSION

Stepping up the United States
growth rate will not be easy.
We no longer have a large agri-
cultural population TO trans
fer TO industry. We do not have
the opportunity to capitalize on
a generations worth OF ad-
vanced technology developed
elsewhere. The only easy growth
available TO us is the growth
that will flow from success In
ending the period Of sluggish
ness dating back to 1857. That
We must have II only because II
is inexcusable to have the
American economy operating
In low gear In a time of crisis.
Beyond full employment.
however, we must rely on the
basic sources of all long-run
growth; people. machines and
knowledge. We must identity
and use a variety Of ways-some
imaginative. some routine - TO
enable our people to realize the
full promise Of our technology
and our economy.
In a setting OF full employ
ment. these measures can help
TO move our growth rate to 4
per cent and above. the Ameri-
can people toward greater
abundance, and the free world
toward greater security.
Evening star., 1963-01-21
Support Is Expected

Mr.. Smith has indicated that
he plans early consideration OF
the resolutions. He expects the
support of leaders OF the APP
preparations Committee and of
some members of the Ways
and Means Committee.
The appropriations group
headed by Representative Can
non, Democrat OF Missouri.
long has complained against
the practice Of other commit
tees drafting bills that permit
advance obligation OF money.
It wants exclusive control Of
legislation involving spending,
either directly or indirectly.
II the "backdoor" spending
resolutions get through Mr..
Smiths committee. they would
automatically come TO q vote
in the House. And, with most
Republicans and Southern
Democrats favoring them, they
would have a good chance Of
being approved.
No Senate action would be
necessary. since the resolutions
deal only with House rules.
Evening star., 1963-01-21
Recommends Aid
For JobIess Youth

A second important require
ment for an effective man.
power policy in a dynamic
economy is a more efficient
system of matching workers
skills to the jobs available
today and to the new jobs
available tomorrow. This calls
for an expanded informationaS
effort, and I have included in
m 1868 program a proposal to
achieve this the persistently
high rates of unemployment
suffered by young workers de-
malld that we act to reduce
this waste of human resources.
I will therefore recommend
the passage Of a Youth Employ
ment Opportunities Act to
foster methods for developing
the potential Of unframed and
inexperienced youth and to
provide useful work experience.
To facilitate growth, we must
also steadily reduce the bar
riers that deny us the full pow
er of our working force. I'M
proved information will help
but more than that is called for.
Institutions which tie workers
in their jobs, or encourage
premature retirement, must be
critically reexamined. An end
to racial and religious discri-
mination-which not only af-
fronts our basic ideals but bur-
dens our economy with its
waste - offers an imperative
contribution to growth. Just as
we strive to improve incentives
to invest in physical capital, so
must we strive TO improve In
centiveS to develop our human
resources and promote their ef-
fective use.
Evening star., 1963-01-21
Rules Fight Takes Shape
On 'BockdoorS Spending

port program. They have been
able in recent years to keep
the resoltions bottled up in
the committee.
Although the leaders sue
ceeded earlier this month in
enlarging the committee to Is
members in a move to retain
control. they may run into
trouble because their margin
of superiority on the commit
tee is a single vote.
Any OF the eight liberal and
moderate Democrats constitut-
ing the majority might find II
politically difficult to oppose
the rules change with the ma
tional debt at a record high
level.
Evening star., 1963-01-21
BY WILLIAM F. ARBoGAST


A new rules fight-involving
what is called "backdoor'
spending-was taking shape to-
day in the House.
Pending in the Rules Com
mittee are more than a dozen
identical resolutions to change
the rules of the House so that
any member could. on a point
of order, halt bills providing
for "backdoor" financing Of
Government activities.
-Four of the proposals have
been introduced by Rules Com
mittee members, including
Chairman Howard w. Smith,
Democrat of Virginia.
They say simply that II
would violate the House rules
to consider any bill carrying
authority to create obliga-
tions by contract in advance Of
appropriations" or any bill
carrying appropriations or
other language that will per-
init the withdrawal Of money
from the Treasury" unless the
legislation originated in the
House Appropriations Commit
tee.