My fellow Americans:
Tonight, as you sit in your homes all across this broad land, I want to talk with you about an issue affecting all our lives. It is the defense of our country, and its cost.
If we ponder this a moment, we all know that this really means the defense of those spiritual values and moral ideals cherished by generations of Americans--the true treasure of our people. This treasure of the spirit must be defended, above all, with weapons of the spirit: our patriotism, our devotion, our readiness to sacrifice.
If we think further, we also know that this defense of America demands still other weapons. We must, of course, want to be free. But this is not enough. To be free and to stay free, we must be strong--and we must stay strong.
Our national security is affected by almost everything that your government does--things far removed from the building of planes or the training of troops. National security involves, for example, the plain honesty and competence of government itself, for no nation is secure whose government does not command respect at home and honor abroad.
Our strength demands, also, healthy two-way trade with our allies and friends--for this nation could not for long enjoy either freedom or prosperity alone in a hostile world. Indeed, our own security demands that we never forget or neglect the military and economic health of these indispensable allies.
And, national security requires an industrious and productive America, for here is the vital source of all our military strength.
We all know something of the long record of deliberately planned Communist aggression. There has been, to this moment, no reason to believe that Soviet policy has changed its frequently announced hope and purpose--the destruction of freedom everywhere.
There is, therefore, no reason for the free nations to alter their course: to hope and work for the best, to arm and be ready for the worst.
We must see, clearly and steadily, just exactly what is the danger before us. It is more than merely a military threat.
It has been coldly calculated by the Soviet leaders, for by their military threat they have hoped to force upon America and the free world an unbearable security burden leading to economic disaster. They have plainly said that free people cannot preserve their way of life and at the same time provide enormous military establishments. Communist guns, in this sense, have been aiming at an economic target no less than a military target.
I believe firmly--and I think the Soviets realize--that the United States, if forced to total mobilization today, could meet and win any military challenge.
I believe no less firmly that we must see and meet the full nature of the present and future danger before us. For the nature of this danger dictates the nature of the defense we summon.
This defense must, first of all, be one which we can bear for a long and indefinite period of time. It cannot consist of sudden, blind responses to a series of fire-alarm emergencies. Even we cannot always be mobilizing forces and materiel with a speed that is heedless of cost, order and efficiency. It cannot be based solely on the theory that we can point to a D-day of desperate danger, somewhere in the near future, to which all plans can be geared.
The truth is that our danger cannot be fixed or confined to one specific instant. We live in an age of peril.
We must think and plan and provide so as to live through this age in freedom--in ways that do not undermine our freedom even as we strive to defend it.
To watch vigilantly on the military front must never mean to be blind on the domestic front. In our present world--in this kind of prolonged tension and struggle--a crippled industry or a demoralized working force could be the equivalent of a lost battle. Prolonged inflation could be as destructive of a truly free economy as could a chemical attack against an army in the field. If, in today's continuing danger, we were to strain our capacity until rigid governmental controls, indefinitely or permanently continued, became mandatory--where then would be the freedom we defend?
Our defense--I repeat--must be carefully planned and steadfastly sustained.
Such planning brings us to another subject, to that bewildering realm of budgets and expenditures and appropriations and deficits and taxes. This, as we all know, is no easy area to explore or to explain. But these rude facts-and-figures of our national economy are, to our body-politic, as vital as pulse-rates or blood-counts.
As you all know, government deficits of past years have been a main cause of the cheapening of our dollar by half its value.
The budget inherited by this Administration, for the year beginning this July 1, called for expenditures of 78.6 billion dollars, and signified another red-ink entry in our national books of 9.9 billion dollars on top of other big deficits for last year and this year.
Beyond this, when this Administration took office, we faced two stubborn financial facts. The first fact was this: under the former Administration expenditures for the future were so scheduled as to reach their peak during 1954 and 1955. The second fact was this: these are precisely the years when, under existing laws, federal revenues from taxes, under scheduled reductions, will fall sharply downward.
If we do nothing about this, the results of these facts could only be: bigger deficits, greater government borrowing, ever increasing cost of living, depreciated savings, higher and higher cost of the nation's security.
These figures are but a small part of the story. Let me give you a few more facts:
First: The past Administration over-estimated tax collections for the next fiscal year by some 1.2 billion dollars. Obviously, even the most conscientious of men must be allowed some leeway in forecasting tax receipts more than a year ahead. Nevertheless it is unfortunately true that this over-estimate of income would bring the red-ink entry for the coming year up to more than 11 billion dollars.
Second: The military budget proposed by the previous Administration for the fiscal year 1954 did not fully plan for one item that could scarcely be called obscure. That item was the Korean War. No specific budgetary provision was made for continuance of this conflict. No provision was made for the building up of Republic of Korea divisions beyond those currently in being. Our task, then, is not only one of dealing with the planned deficit, but also one of providing for the costs of the Korean War so long as it may continue.
Third: Largely aside from the budget and deficit, there will be, as of June 30 of this year, 81 billion dollars of authorizations to spend money for which cash must be found in the tax revenues of the next several years. Since a large part of this enormous sum is already under contract, mostly for defense purposes, there is little room in which to turn around to make any immediate economies in this area.
This whole matter is rather like buying C.O.D. When you order goods C.O.D, you do not need any money until the items you ordered come to your front doors--and then it is Cash on Delivery. This Administration faces payment on just such an 81 billion dollars C.O.D. over the next several years.
I come now to the critical question: how can we make more bearable, for every family in our land, the burden of this inheritance and at the same time make our nation's security more sound and sure?
To begin with the military front: there must be--far from any slackening of effort--a speeding, a sharpening, a concentration that will extract the last cent of value from every dollar spent. Our defense establishment has yet to reach the level of performance we want. Until it has, we shall not rest.
I want here to state a few critical facts plainly. They are critical. They are facts. And they should be beyond the reach of any partisan debate.
It is fact that there is no such thing as maximum military security short of total mobilization of all our national resources. Such security would compel us to imitate the methods of the dictator. It would compel us to put every able-bodied man in uniform--to regiment the worker, the farmer, the businessman--to allocate materials and to control prices and wages--in short, to devote our whole nation to the grim purposes of the garrison state.
This, I firmly believe, is not the way to defend America.
It is also a fact that when we seek anything less than this vision of military perfection--total mobilization--we are debating in a realm of speculation--sometimes informed, more often uninformed.
Words like "essential" and "indispensable" and "absolute minimum" become the common coin of this realm--and they are spent with wild abandon. One man will argue hotly for a given number of aircraft as the "absolute minimum." Another, even from the same military service, will answer just as passionately that a smaller number of aircraft but of a different kind is "imperative." And others will earnestly advocate the "indispensable" needs for ships or tanks or rockets or guided missiles or artillery--all totalled in numbers that are always called "minimum." All such views are argued with vigor and tenacity, and I believe honestly. But obviously all cannot be right.
I most deeply believe that it is foolish and dangerous for any of us to be hypnotized by magic numbers in this type of analysis. There is no given number of ships--no specific number of divisions-no magic number of air wings in the Air Force, Navy, and Marine Corps--no special number of billions of dollars--that will automatically guarantee security.
My associates and I have given to this phase of our national planning careful, personal study and analysis. I have, as you know, lived with it for many years. We have also sought, of course, advice from numbers of competent people.
Let me tell you how we approached this analysis. We did not set any fixed sum of money to which our defense plans had to be fitted. We first estimated what is truly vital to our security. We next planned ways to eliminate every useless expenditure and duplication. And we finally decided upon the amount of money needed to meet this program.
Such an analysis rejects the extreme arguments of enthusiasts and of all groups of special pleaders both in and out of the military services.
But this I assure you: what has been so carefully evolved is a sound program. It contemplates in each of the armed forces calculated risks which have been prudently reasoned. And it represents, in our combined judgment, what is best for our nation's permanent security.
There is, I believe, only one honest, workable formula. It is not magical, but it is the best that competent men can define. It is this: a defense strong enough both to discourage aggression and beyond this to protect the nation--in the event of any aggression--as it moves swiftly to full mobilization.
The more swiftly and smoothly we-can mobilize, the less our dependence upon costly standing armies, navies and air forces.
The more vigorously we eliminate the non-essential, the more effectively we can concentrate on what is vital.
With all this in mind, we are putting major emphasis on air power, which daily becomes a more important factor in war. Our revised budget will provide the Air Force with more than 40% of all defense funds for 1954. As of this June 30, the Air Force will have available a sum of more than 40 billion dollars. Buttressing this strength are those additional funds allocated to naval air power for 1954--totalling more than half of the Navy budget. This means that almost 60 cents out of every dollar to be available for the entire national defense in the next year will be devoted to air power and air defense.
These investments in air power represent and will continue to represent the heaviest single annual outlay of our government. It is my conviction that our developing program--under constant review and study--will result in a steady growth in the size and efficiency of the air defense, until we have attained an adequate level of security.
I repeat: this security cannot arbitrarily be defined as the simple equivalent of a specific number of aircraft or air wings. For example: today three aircraft with modern weapons can practically duplicate the destructive power of all the 2700 planes we unleashed in the great break-out attack from the Normandy beachhead. Clearly every technological advance profoundly affects this problem of air power--including the development of missiles now in production. Similar advances in civil defense will help shape the nature and size of our Air Forces.
The plain truth is that security is planned, not blindly bought. It is the product of thought, and work, and our ability and readiness to bear our military burden for however long the threat to freedom persists.
The course we must set for ourselves is a difficult one. It must avoid, on the one hand, the indefinite continuance of a needlessly high rate of Federal spending in excess of Federal income. It must avoid, on the other hand, any penny-wise, pound-foolish policy that could, through lack of needed strength, cripple the cause of freedom everywhere.
This middle way may lack drama and sensation. But it has sense and strength.
It may not scream with shrill crisis and emergency. But it speaks with conviction and realism.
Because of the necessary costs of the national security, your government is not just preaching economy but practicing it. Every department of this government has already cut its requests for funds for the next fiscal year. As a result, we have been able to reduce the previous Administration's request for appropriations of new money by some 8 1/2 billion dollars. This prodigious sum means more than $50 for every man, woman, and child in our country. This is the first step in cutting expenditures. And next year we shall spend at least 4.5 billion dollars less than was previously planned.
Here let me add this word. Government cannot do this job-any more than any other job--utterly alone. You and your fellow-citizens who want your government to spend less must yourselves practice self-restraint in the demands you make upon government. You as citizens cannot help the common cause by merely favoring economy for every group except the one to which you belong.
All that we have done and saved to date is an encouraging start. But it is no more than a start. During every day of the coming year we must and shall continue striving to find, in every department of the government, new ways to achieve effectiveness with economy. I need scarcely remind you that the saving of 4.5 billion dollars is less than half the deficit planned by the previous Administration for the next fiscal year.
It is in the light of these facts that all of us must honestly face the matter of taxes. It must be apparent that to accept a great revenue loss at this time would be to ensure longer life to bigger Federal deficits and greater eventual danger to our country.
The convictions of this Administration on these grave subjects are clear and simple.
We believe that for the long term present taxes are too high. We think they are becoming a real threat to individual initiative.
We believe, at the same time, that no citizen--once satisfied that his government is operating with honesty and economy, and planning with foresight--wants any tax saving at the price of essential national security.
We believe, finally, that our truly urgent need is to make our nation secure, our economy strong, and our dollar sound.
For every American, this matter of the sound dollar is crucial. Without a sound dollar, every American family would face a renewal of inflation, an ever increasing cost of living, the withering away of savings and life insurance policies. An immediate tax reduction, and bigger deficits, which would in turn inflate the dollar still more would cheat every family in America. It would strike most cruelly at the poorest among us.
The balancing of the budget is, therefore, vital--not merely as some abstract, statistical feat to be performed by government accountants but to help give each citizen the kind of dollar with which each family in the nation can begin balancing its own budget.
With this in mind, I am recommending the following measures to the Congress for tax legislation.
First. The excess profits tax on corporations as now drawn should be extended for six months beyond its present expiration date of June 30--an extension that will produce a gain of revenue of 800 million dollars.
Second. The 5% reduction in the regular income tax on corporations, now scheduled to go into effect April 1, 1954, should be repealed. The continuation of this additional 5% will bring in approximately 2 billion dollars a year.
Third. The reduction in excise taxes, which would take place next April 1 under present law, should not be put into effect pending the development of a sounder system of excise taxation, for which I shall make specific recommendations to the Congress next January.
Fourth. There is now scheduled an increase in the old-age security tax from 1½ % to 2 % on both employees and employers, to go into effect next January 1. It can and should be postponed, for the old-age and survivors trust fund has now reached 18 billion dollars and receipts at present tax rates are in excess of current expenditures. This will be a worthwhile saving to wage earners and, in my judgment, is simple justice to them.
Finally: Another relief for the taxpayers will be in the reduction in personal income taxes that will go into effect next January 1.
While this is in accordance with the letter of existing laws, it would not have been possible but for the economies in government that have been and are being made by this Administration. At the same time, I do not believe that the American people think that earlier reduction would be prudent. Your communications to me show that--first of all--you want our nation secure and our dollar sound. This Administration agrees. To advance six months the date of this scheduled reduction would take away 1.5 billion dollars and, to that extent, would risk both of the objectives we seek.
I repeat, no effort will be spared in the coming months to achieve additional vital economies. To do this in significant amounts will depend on some gradual improvement in the world situation. If we should be disappointed in this, I shall, of course, be compelled to make recommendations for alternative sources of revenue. But if these efforts prove successful, a balanced budget will come within sight.
Next January, I shall recommend to the Congress a completely revised program of taxation. Already appropriate studies are under way in the House Ways and Means Committee and in the Treasury Department. Our system of taxation must not only provide our government with the resources to be strong for freedom's sake, but also enable our people to apply their initiative and industry fruitfully. This means taxes so adjusted as to fall where payment is least harmful, and so planned as to create jobs and expand the income of the mass of our people.
I have spoken to you tonight not only as your President but as one whose life has been devoted to the military defense of our country.
I have outlined my convictions as to the way to defend America.
This is the way to work for national security--in the full, true sense.
It is with the greatest confidence that I say to you:
We possess, as a people, all the qualities, all the talents, and all the resources necessary to resolve the problems inherited from the past or inherent in the present.
We live, as I have said, not in an instant of danger but in an age of danger.
We will meet it, as Americans, boldly, vigorously, and successfully.
We will make of it an age of productive freedom, unmatched in all man's history.
This is what I ask all of you to help to do.