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During these five years, Federal agencies have acquired over 800,000 additional acres for preservation for future generations, many of them near our heavily-populated urban centers such as New York and San Francisco. In addition, the Legacy of Parks program, which I initiated in 1971, has made massive strides in bringing parks to the people. To date, 400 separate parcels covering almost 60,000 acres of under-utilized Federal lands in all 50 States have been turned over to State and local governments for park and recreational use. Many of them are near congested urban areas. We will continue to expedite transfer of additional surplus properties to State and local governments for park and recreation use.

## Improving the World Environment

On our small planet, pollution knows no boundaries. World concern for the environment is as necessary as it is encouraging. Many significant international actions have been taken in recent years, and the United States can be proud of its leadership.

These actions have included the signing of international conventions to protect endangered species of wildlife, to regulate ocean dumping, to extend the national park concept to the world, and to control marine pollution.

A United Nations Environment Program was established last year. With it, the UN Environment Program Fund came into being, fulfilling a proposal I had made in 1972.

Under the US-USSR Environment Agreement, which I signed in Moscow in May, 1972, Soviet and American scientists and environmentalists have been actively working together on serious environmental problems.

## The Challenge Ahead

As part of this Administration's continuing effort to conserve outdoor recreation areas, my new budget will propose full funding of the Land and Water Conservation Fund for 1975. Nearly two-thirds will aid State and local governments in acquiring their own recreation lands and facilities. Coupled with the change I have proposed in the formula for allocating funds to the States, this measure would encourage the development of more recreational sites closer to the places where people live and work.

This year we have the unique opportunity and responsibility to determine the future use of enormous land areas in America's last great frontier -- Alaska. Last month, in accordance with the Alaska Native Claims Settlement Act, I transmitted to the Congress recommendations that would add 83.47 million acres in Alaska to the National Park, National Forest, Wildlife Refuge and Wild and Scenic Rivers Systems. If the Alaska frontier is thoughtlessly developed, it will be gone forever. But we now have the opportunity to make considered judgments as to the appropriate uses of these outstanding Alaskan lands for the American people of all future generations.

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This session of the Congress has before it 17 major
natural resources and environment proposals that I have
previously submitted, and on which I again recommend action.
These include:

**Department of Energy and Natural Resources:** While I discuss this new department elsewhere in this message, I want to reemphasize that I consider it of cardinal importance in ensuring that complex, interrelated environmental and natural resource issues receive an appropriately wide policy overview and administrative coordination.

**National Land Use Policy:** Adoption of the National Land Use Policy Act, first proposed in 1971, remains a high priority of my Administration. This legislation would reaffirm that the basic responsibility for land use decisions rests with States and localities -- and would provide funds to encourage them to meet their responsibility. I am pleased that the Senate has passed legislation incorporating some of the policies that I proposed. I urge the Congress to pass legislation which would assist States and localities, but which does not inject the Federal Government into their specific land use decisions.

**Coastal Wetlands:** These environmentally vital wetlands are increasingly threatened by development. My proposed Environmental Protection Tax Act would amend Federal tax laws to discourage the unwise use of these areas, and to enhance our opportunities for sound land use planning within the coastal zone.

**Wilderness:** Traditionally, we have looked westward for our wilderness areas. Last year, however, I proposed that 16 Eastern areas be designated as "wilderness" and that 37 others be studied for possible wilderness designation.

**Historic Preservation:** Because we have an irreplaceable historic and architectural heritage, I have proposed an Environmental Protection Tax Act to discourage the demolition of historic structures and to encourage their rehabilitation.

**Big Thicket National Biological Reserve:** The Big Thicket area of east Texas is a biological crossroads unique in the United States. I am gratified that the House has acted and I urge the Senate promptly to consider my proposal to preserve key segments of the Thicket in a Big Thicket National Biological Reserve.

**Big Cypress National Fresh Water Reserve:** Protection of the Big Cypress Swamp in Florida is essential to the preservation of the water supply in the Everglades National Park. I have recommended legislation which would authorize the acquisition of over 500,000 acres, enabling us to protect this vital water supply.

**Public Land Management:** The Secretary of the Interior needs additional authority to protect the environmental values of our public domain lands. I again urge that he be given that authority.

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Controlling Pollution: Three of my legislative proposals aimed at controlling pollution have not yet received final Congressional action:

Toxic Substances: New chemicals with unknown environmental effects come into use each year. Authority to test these substances and to restrict their use in the event of danger, while still permitting the orderly marketing of needed chemicals in a timely fashion, is highly desirable.

Hazardous Wastes: Disposal of wastes on land is increasing due to advances in industry and technology and because of our stringent controls on air and water pollution. These wastes can be hazardous to human health and other forms of life. My proposal provides for national standards for treatment and disposal of hazardous waste with primary regulatory responsibility resting with State governments.

Safe Drinking Water: The water we use in our homes should not endanger our health. Under my proposal on safe drinking water, Federal standards would provide health protection by requiring strict limitation of any contaminants in drinking water, but primary enforcement responsibilities would be left to the States. Alternative legislation is now being seriously considered by the Congress which would require unnecessary Federal standards on operating treatment plants, generate a domineering Federal enforcement role, and create several new categorical subsidy programs.

## COMMUNITY DEVELOPMENT

Although American communities share many of the challenges of our age, the relative intensity and the particular nature of these challenges vary sharply from one community to another.

The current way of providing most Federal aid to our communities -- with each dollar tied to a string pulled and manipulated by a Federal planner -- is wrong. Much of the money that pays the Federal planners could better be spent in the local community; the decisions made by the planners could better be made by the people who live on the scene.

In these past few years, we have sought to change the old system. We have recognized that the Federal policy that will work best is one that helps the people of a particular community define their own needs and meet those needs in the way which they consider best. While in this Administration we have tried to be generous, we have also tried to grant communities greater freedom to set their own priorities. Since 1969, we have:

Spent twice as much money on community development programs as the Federal Government had spent for this purpose in the entire previous history of the Nation.

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-- Reduced the red tape and arbitrary restrictions on local action that were so much a part of these programs in the past.

-- Moved authority for administering community development programs from Washington to the field, where administrators are more accessible to local officials, and where they can become more familiar with local problems.

-- Stepped up Federal support for State and local planning and management, again spending more for this purpose than had been spent in all previous years combined.

As a result, not only have cities received more Federal dollars, but they have been able to accomplish more with each dollar than before.

Despite this progress, we need a much more sweeping reform than has been possible under existing laws. Therefore, I once again urge passage of The Better Communities Act, a $2.3 billion bill which would give local officials new flexibility and provide greater effectiveness in the expenditure of Federal community development funds. This legislation would consolidate seven categorical grant programs into a single program. Funds would be distributed on the basis of need, and then local communities could decide for themselves what projects should come first. Thus we could eliminate a mountainous volume of red tape and allow local government to play a larger role in determining their own destinies.

Two Congresses have now addressed community development legislation. Both of them have agreed, for the most part, with the basic principles and approaches that the Better Communities Act represents. But we have still had no action. Cities and towns that have counted on having this legislation in effect in the next fiscal year now face an uncertain future. I urge the Congress to move ahead as quickly as possible with the Better Communities Act -- and I pledge every effort to work out our remaining differences so that our cities and towns can benefit from this program as soon as possible.

I also urge the 93rd Congress to pass the Responsive Government Act that I submitted last year. This measure would enable State and local officials to improve their planning, decision-making and managerial capabilities through broad-based, flexible grants.

## RURAL DEVELOPMENT

Over $12 billion has been invested in rural development through Agriculture Department programs alone during the five years of this Administration. Annual Federal funding for these rural development programs has been tripled during that time. These funds have been spent for:

-- Rural housing, where more than $6.4 billion has been provided through 487,000 housing loans.

-- Electrification and telephone systems, where over $3 billion has been spent to bring service to 177,000 new rural consumers.

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-- Water and waste disposal, where some 8,500 loans and grants totaling $1.4 billion have been provided to rural communities for water and waste disposal systems.

-- Loans to farmers, who received more than 489,000 loans totaling over $4.2 billion.

In addition to these efforts under Department of Agriculture programs, almost 200 other Federal programs have had a significant impact on rural areas. As a result, rural residents receive as much Federal support per capita as residents of urban areas.

During the past year we have markedly increased our activity on behalf of the Nation's rural residents:

-- During 1973, the Rural Development Act was funded for the first time to provide over $750 million in loans and grants to States under procedures which give them a new flexibility in promoting rural industrialization and in improving the quality of rural life.

-- An interim rural housing policy was developed, placing greater emphasis on more effectively utilizing existing housing and making Farmers Home Administration programs more responsive to those with the greatest housing needs.

-- To ensure continuing Government attention to rural development needs, this Administration has also created both a special Cabinet-level Rural Development Committee and the new post of Assistant Secretary of Agriculture for Rural Development.

As we look to the future patterns of national growth, we must never forget that the prosperity, the vitality and the character of rural America are essential cornerstones of our Nation's balanced growth. It is essential that rural America receive its proper share of our attention -- and I am determined that this shall be the case.

## HELPING DISASTER VICTIMS

Seldom is swift and effective Government action needed so urgently as when a natural disaster strikes.

Since taking office, I have had to declare over 160 major disasters in 42 States and in 3 territories. In recent years, the amount of Federal assistance given

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to disaster victims has been greatly expanded, and we
have also pressed an intensive effort to provide this
aid more equitably and expeditiously.

Since more than 90 percent of all property damage
resulting from natural disasters is caused by floods,
I was especially pleased by the Congress' approval
last year of our proposed Flood Disaster Protection
Act, which significantly expands and improves the
national flood insurance program.

More remains to be done, however, if we are to
meet our basic humanitarian responsibility to those
who fall helpless and innocent victims to nature on
the rampage. Therefore, I have also proposed a Disaster
Preparedness and Assistance Act, which places new
emphasis on the essential element of preparedness,
while also increasing the role of State and local
officials in allocating Federal disaster funds and
cutting the tangle of red tape. It also provides
for the automatic use of Federal resources when
major disasters strike, and it includes generous grant
features for those individual disaster victims unable
to repay Government loans, as well as for communities
faced with the task of restoring damaged public facilities.

That natural disasters will continue to strike is
certain; the only uncertainty is how well prepared we
will be. As a generous and compassionate Nation, we
should be prepared to give the victims of these disasters
the prompt and effective help they so desperately need.

BETTER HOUSING FOR ALL

As I have stated many times, this Administration
will not waver from the Federal commitment first outlined
in the Housing Act of 1949: "a decent home and a suitable
living environment for every American family."

The state of America's housing will continue to
depend on the state of America's economy more than on
any other factor. The forces of the marketplace are
the forces that count the most -- families with sufficient
real income and sufficient confidence to create an effective
demand for better housing on the one hand, and builders
and credit institutions able to respond to that demand
on the other.

The Federal Government must play a major supporting
role through its actions in the mortgage credit market
and its help for low income families who need assistance
in obtaining adequate housing.

Last September, as credit for housing was becoming
increasingly scarce, the Administration acted to make
more credit available to home buyers. Recently,
mortgage market conditions have begun to improve.
However, to assure continuing improvement, I recently
authorized a reduction in the maximum allowable interest
rate for mortgages insured by the FHA, the Farmer's Home
Administration and VA -- a more than $6 billion mortgage
insurance program that will assist in financing the
construction of up to 200,000 housing units.

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These actions should have a favorable impact on housing production. If the anticipated results are not fully achieved I will recommend further action to ensure a reasonable level of production.

In the last five years a substantial effort has been made to address the country's housing problems:

- Largely because of a general upswing in the economy, housing production has occurred at record levels.

- FHA mortgage insurance has enabled nearly 3-1/2 million families to purchase homes.

- Over two million units of subsidized housing for low and moderate income families have been approved, more than during the previous 33 years of federally subsidized housing programs.

- Over $1.4 billion has been committed to improving and modernizing existing public housing.

- Subsidies to local housing authorities have grown from $33 million in 1969 to $350 million in 1974.

Even as good housing has become a reality for most Americans, it is clear that important problems still exist. Two are especially significant. First, our credit institutions often encounter problems in providing adequate housing credit. Second, too many low income families are unable to obtain adequate housing -- even as good housing sits vacant in their community. We must help them to meet their needs.

In order to increase the availability of housing for all families, I urge passage during this session of two key measures I have already proposed:

- The Financial Institutions Act to enable savings and loan associations to compete more effectively for funds during periods of tight money, as well as to encourage increased investment in housing through a tax credit on income earned from residential mortgages.

- The Administration's proposed Housing Act which would ease the present tight mortgage credit situation and make homeownership easier in the long term by:

- Authorizing increases in the permissible mortgage amounts eligible for FHA insurance.

- Permitting home buyers to pay market interest rates on FHA and VA insured mortgages, and reducing the cost of buying a home by doing away with the present system of charging points on mortgage loans.

- Authorizing on an experimental basis more flexible repayment plans on FHA insured mortgages.

- Authorizing more flexible interest rates, longer repayment terms and higher amounts for mobile homes and home improvement loans.

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This legislation would extend authority for
extensive experiments with a new approach -- direct
cash assistance -- for addressing the housing problem
of low income American families. Despite the commit-
ment of over $66 billion, evidence has clearly shown
that the subsidized housing programs for low income
families have not worked well. Instead of programs
to treat symptoms, I will continue to press for a
longer term solution -- which goes to the root of the
problem -- lack of sufficient income -- and which
permits the private housing market to work in as
efficient a way as possible. Additionally, this
legislation would improve the operation of our
existing public housing projects, by helping them
move to a more effective, efficient and self-sufficient
basis of operation.

IMPROVING TRANSPORTATION

The energy crisis has made urgent what once seemed
only necessary: the building of a transportation system
that permits all Americans to travel efficiently and at
reasonable cost.

While some elements of our transportation system -- such
as the Federal highway network -- have been dramatically
improved or expanded in the past decade, others -- notably
the railroads -- have fallen into serious difficulties. It
is also apparent that our public transit system must be
greatly improved within our urban centers. The measures
already taken and others which I shall propose this session
are particularly important in helping to deal with the energy
crisis by encouraging a more sensible utilization of our
transportation resources.

During the past four years, several key measures have
helped lay the basis for a greatly improved transportation
system.

Under the Urban Mass Transportation Act of 1970, we
increased annual Federal aid to urban public transportation
to $1 billion by 1973 -- 8 times the level of 1968 -- and
in 1973 another $3 billion was made available for the
years immediately ahead. For the first time since World
War II the downward trend in transit ridership has been
reversed, and is now moving upwards. And for the first
time, under the provisions of the Federal-Aid Highway Act
of 1973, States and localities can now use a portion of
their Federal highway funds for public transit purposes.

There has also been improvement of rail passenger
service under AMTRAK, a public corporation created by
the Rail Passenger Service Act of 1970. After years of
steady decline in rail passenger service, the past year
saw a 14 percent increase in the number of passengers
carried on AMTRAK.

Just this past year, we also went to work to avoid a
major rail crisis through passage of the Regional Rail
Reorganization Act of 1973, which provides for the
restructuring of the bankrupt railroads of the Northeast
and Midwest region into a streamlined system. By 1976,

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we hope that the affected railroads will be able to
operate profitably and can survive as producers, not
consumers, of tax revenues.

Significant new initiatives have also been taken in
airport and airway development, making vitally needed
improvements in the merchant marine, and in promoting
transportation safety, especially on our Nation's
highways.

Clearly, however, there is still much to be done. It
is my hope that 1974 will be the year when we make major
advances by enacting two critical transportation bills.

One of these proposals, which I will send to the
Congress in the near future, would give our communities
not only more money but also more freedom to balance their
own transportation needs -- and it will mark the largest
Federal commitment ever to the improvement of public
transportation. This bill would increase Federal assistance
for metropolitan areas by nearly 50 percent over the level
of fiscal year 1974. More than two-thirds of those funds
would be allocated by formula to State and local govern-
ments and those governments could better determine their
own transportation priorities, choosing between construction
of highways or public transit systems, or the purchase of
buses or rail cars. Additional transit aid would also be
made available to rural communities for the first time.

Under this bill resources would also be available
for the first time to augment the operating funds for
public transportation systems in both urban and rural
areas. By permitting Federal resources to be used for
operating purposes, this proposal should make it
unnecessary to establish a new categorical grant
program for transit operating subsidies, as is now
contemplated in bills before the Congress.

As a second major transportation initiative this year,
I shall propose that we modernize the regulatory system
governing railroad operations. This legislation would
make it easier for railroads to consolidate service on
a sustainable basis. It would make changes in the system
of rate regulation to allow rail carriers to compete more
effectively with one another and with alternative modes
of freight transportation. Discriminatory State and local
taxation of interstate carriers would be barred. It would
also provide $2 billion in Federal loan guarantee authority
to finance improvements in rights-of-way, terminal and rail
plant facilities, and rolling stock, where necessary, which
would be a major step in our effort to improve the Nation's
railroad system.

Additional transportation measures I shall soon propose
will include:

-- Improvements in highway safety through the earmarking of approximately $250 million of the 1975 Federal highway program for the elimination of death traps from the highways -- by, for example, improving high-hazard intersections and replacing dangerous bridges. New bonus grants to the States will also be initiated to encourage the adoption of improved safety legislation and to reward States for outstanding safety accomplishments.

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-- A restructuring of the airport and airway financing system to allocate costs more equitably among the users of our airways and to provide more flexibility in the use of funds.

## DISTRICT OF COLUMBIA

Last Christmas Eve, when I signed the new home rule bill into law, the Nation's Capital reached a significant milestone. If the voters of the District accept the proposal in the forthcoming referendum, the city will soon have its first elected mayor and city council in 100 years. In addition to giving the citizens of our Nation's Capital the right to elect their own officials and a greater role in decisions affecting local affairs, the act also transfers to the District functions now carried out in Federal agencies which should rightfully be under local control.

In order to accomplish this transfer of responsibilities to the local government, much work will have to be done. This Administration will make every effort to assist in that transfer and to ensure that it is both timely and effective.

While our attention to the affairs of the District of Columbia has been captured by the transition to home rule, we must not ignore another important task before us. As the city moves into a new era of self-government, it must also prepare for the Nation's celebration of the Bicentennial.

A Federal Bicentennial Task Force has been working to ensure that the Federal Government meets its financial and program commitments in the Nation's Capital. Under the leadership of the Bicentennial Coordination Center, which I established over two years ago, a number of projects are moving forward. The National Visitors' Center, Constitution Gardens, the Eisenhower Civic Center, the Fort Circle Parks, the National Air and Space Museum and other projects will contribute enormously to the celebration which takes place here in 1976. In addition, the Pennsylvania Avenue Development Corporation will soon present its plan to restore and improve this central, historically important thoroughfare.

During the coming year, I also urge the Congress to take action on pending legislation to create a District of Columbia Development Bank, which would do much to broaden the economic base of the District.

## THE BICENTENNIAL

As we near the celebration of America's Bicentennial, which officially begins in March of 1975, the tempo of preparations has picked up. A sound organizational framework has now been established, with the approval by the Congress last year of a new American Revolution Bicentennial Administration. Each of the 50 States, the District of Columbia and the four territories has also established its own Bicentennial Commission to plan and coordinate local Bicentennial projects. Some 370 counties, cities, towns, villages and tribal units have been recognized as Bicentennial Communities, and some 600 applications for this designation are currently being reviewed.

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On the Federal level, I have created the Domestic Council Committee on the Bicentennial. This Cabinet-level Committee has approved the goals for Federal participation in the Bicentennial, established an Interagency Bicentennial Task Force, and approved over 200 Bicentennial projects of the Departments and agencies.

The Department of the Interior will complete the development of historically significant National Park sites; the National Foundation on the Arts and the Humanities will support cultural activities relating to the Bicentennial; and many of our other national institutions, such as the Smithsonian Institution, will present special exhibitions across the Nation.

Other nations are actively responding to the "Invitation to the World" that I issued on July 4, 1972 to participate with us in this celebration which is not ours alone, but one which draws on the heritage of every nation from which people have come to our shores.

In celebrating America's Bicentennial, we shall, of course, commemorate our national achievements. We shall honor our celebrated leaders even as we remember those whose contributions were less well known. We shall take stock of our shortcomings and resolve to overcome them.

What we will celebrate most of all in 1976 will be the vitality of the American people. We have tried to ensure that Federal Bicentennial activities reflect the diversity which is ours alone, and which is appearing in community Bicentennial planning across the country.

## CULTURE AND COMMUNICATIONS

When I took office in 1969, I was determined to give support to the goal of substantially strengthening the arts and humanities in the United States. The result has been the rapid growth of the National Endowment for the Arts and the National Endowment for the Humanities -- which had existed before but at a very low level of activity.

In the current year, the National Endowment for the Arts will spend $60.8 million on a large scale of programs intended to enrich America's cultural present and future. A broad range of individuals as well as institutions, both public and private, are being assisted. And special support is being given to projects which will add to the celebration of our Bicentennial.

The Congress has in the past given strong bipartisan support to the Arts Endowment. That same support will be needed in the future. Increased Federal funds, eliciting greater financial support from the private sector and State and local governments, will ensure the flourishing of American arts in the years ahead.

The National Endowment for the Humanities has likewise made outstanding contributions to the stimulation of our intellectual and cultural life. One measure of the

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growing importance of its activities is the fact that the Humanities Endowment has a program today which is ten times as large as it was five years ago.

The Humanities Endowment will also play a major role in promoting the Bicentennial and will emphasize activities which reach large numbers of people, such as film and television productions and traveling exhibitions.

In America, television is by far the best means of communicating with the widest audience. To assure the American audience a greater range of television programming of a type not financially feasible for commercial television, we have dramatically increased our support for public television in the last five years.

Public Broadcasting matured during the past year. Both the television and radio licensees reorganized themselves in a way which encouraged a more rational relationship between them and the Corporation for Public Broadcasting, and increased the ability of each local station to provide programs uniquely tailored to their local communities.

Another aspect of electronic media that has recently become a public policy issue is cable television, a development that could lead to a vast expansion of the Nation's communications capabilities. In June of 1971, I established a Cabinet Committee to develop proposals for a comprehensive national policy on cable communications. I have recently received and am now reviewing the report which is the product of that committee. I have also asked the Director of Telecommunications Policy to prepare legislation to move toward the adoption and implementation of a national cable television policy and I expect to submit such legislation to the Congress in the near future. I encourage the Congress to review carefully the issues presented by cable television and I especially encourage a widespread national debate on this subject which could play such a major role in all of our lives during the future.

## SCIENCE AND TECHNOLOGY

One of the great strengths of this Nation has been its preeminence in science and technology. In times of national peril we have turned to the men and women in the laboratories in universities, Government, and private industry to apply their knowledge to new challenges.

Once again, in the current energy crisis, we are calling upon them to respond. I have outlined, in my recent energy message to the Congress, the first step in a five-year, $10 billion research and development effort in energy: $1.8 billion for direct energy R&D for the coming fiscal year and an additional $216 million for supporting research -- a total increase of 80 percent over this year.

A look at the broad scope of this energy effort tells a great deal about our confidence in the capabilities of the Nation's scientists and engineers. We are calling on them to accelerate the development of nuclear power systems, to determine how we can use our abundant supplies of coal in ways that are environmentally acceptable and to improve technology for harnessing natural energy sources such as the sun and the heat of the earth. At the same time, we are asking them to explore new ways of conserving the energy that we already use for everyday conveniences such as our automobiles.

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This Administration recognizes that the need for progress in every major area of American life requires technological input. We are therefore committed to giving all our major programs a broad scientific underpinning. The new budget will call for an increase of over 20 percent in civilian research and development expenditures.

In addition to a major increase for energy, research and development funds will be spread across a large number of programs for enhancing the prosperity, well-being, and health of Americans. Science will continue to be vital to our efforts to fight drug abuse, to prevent infant mortality, to combat venereal disease, and to aid in treating mental illness.

We will call upon the services of our scientists and engineers to design better forms of transportation, and to make safer the transportation we already have. We will examine ways of making our vast agricultural establishment yield more food at lower prices, and try to lessen agriculturally-related pollution. We will attempt to develop methods of mining that will not only yield greater mineral wealth but also give the miner greater safety and the landscape greater protection. We will study ways to protect our wildlife from natural and man-made attack, and we will attempt to learn how to protect ourselves from the violence of nature in the form of floods, landslides, earthquakes, tornadoes, and other natural calamities.

This Administration recognizes the vital role which the social sciences must play in America's growth. Money will be made available for studying the social effects of various Government income distribution and redistribution plans, such as social security, welfare benefits, health insurance, and varied and experimental educational forms.

In every great area of national endeavor, the Administration will see that adequate funds for making scientific progress are spent.

That also means we will continue our important efforts in space. The exploration of space is today making a key contribution to man's understanding of his universe and to our abilities to manage our resources on earth wisely. As our Skylab astronauts have proven, space is now an acceptable working environment for man.

While we explore our planetary system, the stars, and the galaxies, we are also using space technology to monitor the earth's environment. The Earth Resources Technology Satellite is allowing us to search for scarce resources from high above the earth. Already, many of our intercontinental communications are by satellite. This year new commercial satellites will also be used for domestic telephone, telegraph, and television services. Satellite weather forecasting is now commonplace as a result of our space efforts.

Space exploration in the future should become more economical as we develop the Space Shuttle, a reusable vehicle for space transportation. A cooperative international aspect of the space program will come with the European developed Spacelab as an integral part of the Shuttle program. In addition, we are now moving full speed ahead with our plans for a joint space venture with the Soviets in 1975.

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THE NEW FEDERALISM

Just as the rapidly changing and increasing demands placed upon Government have made it necessary to reorganize the Federal structure, they have made it even more imperative to make State and local government stronger and more effective.

During the last four decades, almost every major attempt by the Government to meet a major social need has resulted in a new national program administered in Washington by a new bureaucracy. Forty years ago there were more than 600,000 Federal employees; today there are more than 2.7 million. In the last decade, this problem has grown acute. In 1960 there were some 200 Federal grant-in-aid programs with outlays of $8 billion, but by 1970 there were nearly 1,000 and the total outlays had risen to $22 billion. And in the next fiscal year we expect outlays for grant-in-aid programs to reach $52 billion, even after our substantial efforts to cut their number. This growth in size, power and complexity has made the Federal Government increasingly inaccessible to the individual citizen it seeks to help.

Many of our new national social programs have actually impeded the development of effective local government. By creating a Federal categorical grant system of staggering complexity and diversity we have fostered at the State and local level:

- Overlapping and wasteful programs;

- Distorted budgets and priorities;

- Additional administrative expense;

- Delay and uncertainty; and

- A diminution in the authority and responsibilities of State and local elected officials, as Federal grants have become the special province of competing bureaucracies.

In one of the basic new directions of my Administration, I proposed in 1969 that we create a new and fundamentally different relationship between State and local government, on the one hand, and the Federal Government on the other. This new relationship has come to be known² as the New Federalism. As I said in 1969, its purposes are:

- To restore to the States proper rights and roles in the Federal system with a new emphasis on local responsiveness;

- To provide both the encouragement and necessary resources for local and State officials to exercise leadership in solving their own problems;

- To narrow the distance between people and the Government agencies dealing with their problems;

- To restore strength and vigor to State and local governments where elected officials know best the needs and priorities of their own constituents; and

- To shift the balance of political power away from Washington and back to the country and the people.

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With the help of both the Congress and the Administration, this new relationship among local, State and Federal governments has begun to take shape:

-- I

-- In 1972, the Congress enacted our General Revenue Sharing program, and already more than $11 billion of new money has been put to work in over 38,000 units of State and local government.

-- Funding through the Law Enforcement Assistance program has demonstrated the flexibility of the New Federalism in leaving to State and local authorities the decisions on how best to combat crime in their jurisdictions. This program has helped to make America's streets safer for our citizens.

-- The Comprehensive Employment and Training Act which I signed into law in 1973 is a landmark example of the New Federalism's broad and more flexible forms of assistance -- and it represents a leading example of what can be achieved when the Executive and the Congress team up to enact solid legislation.

-- New authorities under the Rural Development Act are being exercised this year in a way which is supportive of State and local development plans and priorities.

-- In addition, within the limits of law, we have moved administratively to strengthen the role of State and local governments by simplifying and streamlining Federal grant systems -- including procedures for State and local review of project proposals affecting their jurisdictions, opportunities for grant integration and joint funding, and the decentralization of many Federal activities to ten Federal Regional Councils.

In the remaining three years of this term I shall continue to take every sound administrative action within the authorities available to me to support and strengthen State and local government, but we must have the support of the Congress to maintain the progress which has begun. Proposals for furthering the New Federalism now before this body and for which I urge your support include:

-- Federal education reforms to consolidate support for elementary and secondary schools as well as vocational and adult programs, and to promote better planning on the local level through advance funding.

-- The Better Communities Act, to replace several ineffective and restrictive urban programs with a flexible approach that would allow local officials to make essential decisions on the way community development funds would be spent.

-- The Responsive Governments Act, to provide needed Federal assistance for improving State and local planning, decision-making and management capabilities. This would help to strengthen the capacity of State and local governments to assume greater responsibility for the administration of their own programs, whether federally assisted or not.

-- The Disaster Preparedness Act, to increase the role of State and local officials in allocating Federal disaster funds and to cut the tangle of Federal red tape.

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In addition to these proposals now pending, a number of the new initiatives that I describe elsewhere in this message also reflect the principles of New Federalism. These include:

-- A new public transportation initiative that would permit States and localities -- both urban and rural -- to allocate highway and mass transit funds in accordance with local conditions and priorities.

-- An economic adjustment assistance program, that would help States and communities to create employment opportunities where they have been affected by structural changes in their economies or where persistent unemployment exists.

-- In the field of health, a comprehensive health insurance plan which would bring protection against medical expenses within the reach of all our citizens.

## MAKING GOVERNMENT WORK BETTER

On taking office five years ago, one of the first needs I sought to address was the organization of the executive branch of Government -- for the plain fact is that the only way Government gets anything done is through its organizational structure, and how well it can perform depends in large measure on how well it is organized.

Because the needs of the Nation continue to change, and because the activities of Government must respond to those changes, the patterns of Government organization that might have been fine in the 1930s or even in the 1960s, may be hopelessly out of date in the 1970s. Therefore, early in my first term I established an expert commission to survey the organization of the executive branch and to recommend improvements to meet present-day needs. The reports of this commission contributed significantly to the reorganizations that I ordered and that I recommended, including the proposal I put forward three years ago for a sweeping reorganization of the executive branch, consolidating seven of the present Cabinet departments into four new units.

Although this basic restructuring has not been enacted by the Congress, other progress of a substantial nature has been made in modernizing the Government. For example, we have established:

-- The United States Postal Service, taking the post office out of politics;

-- The Office of Management and Budget, providing a strong management arm to assist in coordinating the functions of the executive branch;

-- A restructured National Security Council;

-- The Domestic Council to coordinate domestic policy formulation;

-- The Council on Environmental Quality, the Environmental Protection Agency, and the National Oceanic and Atmospheric Administration, all to provide leadership in meeting our vital environmental needs;

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- The Special Action Office for Drug Abuse Prevention and the Drug Enforcement Administration;

- The Council on Economic Policy, to facilitate the formation and execution of overall economic policy;

- The Council on International Economic Policy, to focus on an area increasingly important both to our foreign relations and to our domestic economy;

- ACTION, to provide stronger coordination and incentives for volunteer activities;

- The Cost of Living Council, to help stabilize prices; and,

- The Federal Disaster Assistance Administration, to help individuals and communities struck by natural disasters.

Each of these reorganization steps was designed to meet a specific need more effectively, or to respond to newly urgent needs. Several were accomplished under the reorganization plan authority which has been available to every President in the last 25 years, but which expired last March. This authority -- which is utilized only with the concurrence of the Congress -- continues to be necessary in order to keep abreast of changing needs, and I urge that it be reinstituted.

Of special concern today is the reorganization of the Government to meet the energy crisis. I have by Executive Order already established the Federal Energy Office to serve as a focal point for energy actions taken by the Government.

But that office lacks a statutory base and does not have sufficient authority to do the full job. That is why I have asked the Congress to establish the Federal Energy Administration and I once again urge it to act on this matter. Recognizing that this country should no longer remain dependent upon foreign energy sources, I have also urged the creation of an Energy Research and Development Administration to develop the necessary technology to tap new domestic sources of energy and a separate Nuclear Energy Commission to carry on the regulatory activities presently assigned to the Atomic Energy Commission.

While these organizational initiatives are needed now, the best organization to knit together the future energy and natural resource programs of the Federal Government would be a comprehensive Department of Energy and Natural Resources. This concept is consistent with the major Federal departmental reform I submitted to the Congress in 1971. Today, I again urge swift, favorable action by the Congress on this proposal so that we will have the broad organizational base that will ultimately be needed to meet many of our energy needs in the most effective manner and to balance energy and natural resource considerations in the future.

That same consolidation and reorganization of the executive branch that I proposed in 1971 would also have created new departments for community development, human resources and economic affairs. The basic problems of fractionated, sometimes overlapping and often conflicting organizations that prompted these original proposals remain acute today. I therefore urge the Congress to join with me in a serious effort to achieve an effective reorganization in these areas.

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In view of the close relationship between food
assistance programs and other income security programs,
I will also propose new legislation to transfer the food
stamp and related programs from the Department of
Agriculture to the Department of Health, Education and
Welfare.

Another important organizational proposal still
awaiting Congressional action is the creation of an
independent Legal Service Corporation. My Administration
will work closely with the Congress in the weeks ahead
to obtain final passage of our proposal which would provide
the poor with quality legal representation, would create
an organization free from political pressures, and would
include safeguards to ensure its responsible operation.
Legal services legislation has already passed the House.
I am hopeful that reasonable legal services legislation
will now be passed by the Senate.

A major new opportunity for better Federal management
has been initiated at my direction by the Office of
Management and Budget. Frequently termed "management
by objective," it involves the identification of specific,
high-priority objectives for each year for each of the
departments and agencies. During the year, progress in
reaching these objectives can be closely measured and
reported to agency heads and to me. In the years ahead
I expect this technique will help make the Government
both more responsive and more accountable.

Nothing is more important to improving the efficiency
of our Government than the recruiting of top flight
personnel for Federal jobs --- including positions in the
career civil service. We will be working in the months
ahead to ensure that executive compensation, career
development and training all attract and hold the best
possible personnel in the public service.

The compensation we provide our top officials is
integral to these efforts to recruit and retain the best
men and women for Government service. Salaries of
Federal judges, Members of the Congress, and heads and
assistant heads of executive agencies have not been
adjusted for 5 years, during which time comparable pay
rates in the private sector increased 30 percent and pay
for other Federal employees has increased significantly.
The report of the Commission on Executive, Legislative
and Judicial Salaries notes that this lag in compensation
also produces serious salary compression among the top ranks
of career employees. I am therefore recommending a three-
stage increase in executive, legislative and judicial
salaries in the budget, at the rate of 7-1/2 percent
annually for each of the next three years. This will make
salaries within the top levels of the Federal Government
more competitive with industry. And it will help us to
make Government work better.

CAMPAIGN REFORM

For several years it has been clear that reforms
were needed in the way we elect public officials. The
intense public focus placed on the campaign abuses of
1972 has now generated sufficient support for this issue
that we now have an opportunity to make a genuine break-
through.

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In a national radio address on May 16 of last year, I announced my proposal for a non-partisan commission on campaign reform. This commission would have re-examined the entire Federal election process to come up with a comprehensive set of legislative recommendations. The Commission would have filed a public report no later than December 1, 1973.

Eight months have now passed since that proposal was submitted to the Congress and the Commission is not even close to being created. If it had been created expeditiously, we would now have its report recommending meaningful reforms for Federal campaigns and as I had originally hoped, those reforms might be in place prior to the 1974 elections.

In light of the delay, I have now decided to submit a comprehensive set of Administration proposals on campaign reform for consideration by the Congress during this session. While I do not believe mine will be the only workable proposals, I do hope they will lead to meaningful debate and reform in this critical area. To that end, I look forward to working with the Congress in a long-overdue effort to clean up the Federal election process.

## AMERICA AND THE WORLD

When this Administration took office, it was apparent that the world had changed in fundamental ways, and that America's foreign policy had to change in equally fundamental ways.

We needed to end our military involvement in the Vietnam war in a manner consistent with our responsibilities and commitments as a major world power.

We needed to adjust to the changes in the strategic situation between the Soviet Union and the United States which presented a unique opportunity to build a solid foundation for peace but which also threatened our own security if that foundation could not be built.

We needed to end a quarter century of hostile isolation which had kept one-fourth of the world's population outside the framework of international cooperation. The world could not afford another generation of hostility between the United States and the People's Republic of China.

We needed to adjust our partnerships with Western Europe and Japan, recognizing their increasing political and economic strength and self-reliance, and emphasizing our important common goals.

We needed to alter the world monetary system to reflect the new realities of the international economic system and America's place in it.

During the past five years we have made striking progress in meeting each of these needs.

### Continuing Responsibility in Vietnam

The United States is at peace for the first time in more than a decade. But peace must be something more than the absence of the active engagement of American forces in conflict.

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We must guard against the tendency to express relief
at our military extrication from Southeast Asia by "washing
our hands" of the whole affair. Men and women are still
dying there. We still have a responsibility there. We
must provide those ravaged lands with the economic assis-
tance needed to stabilize the structures of their societies
and make future peace more likely. We must provide, as
well, the continued military aid grants required to maintain
strong, self-reliant defense forces. And we will continue
to insist on full compliance with the terms of the agree-
ments reached in Paris, including a full accounting of all
of our men missing in Southeast Asia.

Building New Relationships

As we work through detente to reduce conflict in areas
of the world where both we and the Soviet Union have impor-
tant interests, we must also continue to work to reduce the
potential causes of conflict between us.

We must persevere in our negotiations with the Soviet
Union to place further limits on strategic arms competition
and in our talks with the Warsaw Pact nations to reduce
forces in Europe in a way that will increase security and
stability for all.

We will pursue our relations with the Soviet Union in
the climate of detente established two years ago in Moscow
and reaffirmed by General Secretary Brezhnev's visit to
Washington last year. During the fateful weeks of the
Middle East war last October, the strength of our detente
was severely tested. Since then, American diplomatic
leadership and initiative have played a central role in
the search for a final settlement in the long-troubled
Middle East. This began with the ceasefire of October 22,
worked out with the Soviet Union's assistance, and was
later strengthened by the Six-Point Agreement in November
to consolidate the ceasefire, then by the Geneva Peace
Conference -- under the co-sponsorship of the United States
and the Soviet Union -- and most recently by the agreement
on the disengagement of Egyptian and Israeli military
forces, which is being implemented in cooperation with
the United Nations Emergency Force. These steps are but
the beginning of broadened efforts to find a lasting
settlement of the area's problems.

The process of building a normal relationship
with the People's Republic of China continues. Liaison
offices have been established in our respective capitals
and there continues to be fruitful contact between our
governments at very high levels.

Strengthening Our Free World Partnerships

As our relationships with old adversaries are changing,
so are our relationships with old friends. Western Europe
and Japan have put behind them the post-war struggle to
rebuild their economies, re-order their societies and
re-establish their political force. Their success in
these endeavors is something we helped to foster and in
which we can take pride. But now times have changed and
our past role in their success cannot be the sole basis
for a continuing relationship. We must instead adjust our
relationships to recognize their new economic

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capacities and their international political objectives. We must accommodate all of these within the framework of the friendship and goodwill of our allies and our whole past history of cooperation in the pursuit of our common goals. This is a cornerstone of the structure of peace we are seeking to build.

With our closest neighbors, here in the Western Hemisphere, we shall continue to seek additional ways of working cooperatively to solve the problems which face the Americas. Secretary of State Kissinger will be meeting in a few weeks with the foreign ministers of Latin America to begin a new and constructive dialogue in the family of American states.

## International Trade and Commerce

As we turn from an era of confrontation to one of cooperation, trade and commerce become more important. We have moved from a position of virtual economic hegemony in the world to a new role in a more interdependent world economy. We must create an equitable and efficient system of integrating our own economy with that of the rest of the world.

Much has already been accomplished on this front. The markets of the USSR and China are now accessible, thereby providing jobs for American workers. Our major trading partners in Western Europe and Japan share our interest in further reducing international trade barriers and increasing world trade. The rigid and outmoded international monetary system which over-valued the dollar and impeded our foreign trade has been decisively altered. After two years of trade deficits, America achieved a trade surplus in 1973.

But we must persevere in our international monetary, investment and trade negotiations. The greatest tasks still lie ahead and the stakes are high. Avoiding the economic and political disruptions associated with international monetary turmoil and restrictive trade and investment practices increases in importance as international inter-dependence grows.

As I noted earlier in this message, prompt passage of the pending Trade Reform Act is essential to achieving the goal of a less restrictive and more equitable international economic system. In addition, we must move forward with the current negotiations to reform the international payments system under the auspices of the International Monetary Fund, reforms which will markedly increase the opportunities for nations to trade and invest profitably.

We must also strengthen our resolve as the world's most prosperous nation to help less fortunate countries. In the world of today, no nation will be fully secure or prosperous until all nations are. As in the past, we will take pride in our efforts to work with developing nations which aspire to greater economic and social well-being. The United States has called for the World Food Conference which will be held in November under the auspices of the United Nations. We will also actively observe 1974 as World Population Year, as proclaimed by the United Nations.

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Maintaining a **Strong** **Defense** **Force**

But as we work for peace, we must be conscious that the
opportunity to build a structure of peace came because our
arms have served as a deterrent to war. We must maintain
that deterrent.

In the last five years, outlays for the Department of
Defense have been reduced by about 1/3 -- measured in con-
stant dollars -- and military personnel have been cut from
3.5 million to 2.2 million.

This year, I will recommend a substantial increase in
the 1975 budget for the Department of Defense. These
increases are necessary to improve the readiness of our
armed forces, to build up levels of essential equipment
and supplies and to preserve present force levels in the
face of rising costs.

CONCLUSION

Throughout these five years, I have had one overriding
aim: to establish a structure of peace in the world that
can free future generations from the scourge of war. Others
may have different priorities; this has been and will remain
my first priority, the chief legacy that I hope to leave
from the eight years of my Presidency.

As we strengthen the peace, we must also continue
each year a steady strengthening of our society here at
home. Our conscience requires it. Our interests require
it. We must insist on it.

As we create more jobs, as we build a better health
care system, and improve education; as we develop new
sources of energy, as we provide more abundantly for
the elderly and the poor, as we strengthen the system
of private enterprise that produces our prosperity --
as we do all this and more, we solidify those essential
bonds that hold us together as a Nation. Even more
importantly, we advance what in the final analysis
government in America is all about: more freedom, more
security, a better life, for each one of the 211 million
individual persons who are America.

We cannot afford to neglect progress at home while
pursuing peace abroad. But neither can we afford to
neglect peace abroad while pursuing progress at home.

With a stable peace, all is possible; without peace,
nothing is possible.

Earlier in this message, I comment that "one of the
continuing challenges facing us in the legislative process
is that of the timing and pacing of our initiatives. . .
selecting each year among many worthy projects those that
are ripe for action at that time. . ."

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