The President's Statement to the Cabinet Following Passage of the Excise Tax Reductions

THE CONGRESS has acted with unparalleled promptness and cooperation in approving the reduction of excise taxes.

Chairman Mills, Chairman Byrd, Senator Long, the committees that handled the bill, and the entire Congress deserve a hearty vote of thanks for their fast action.

I am pleased with the strong bipartisan support which has brought about this long overdue relief for both consumers and producers.

The bill will reach the White House today.

I will immediately ask the Treasury Department, the Bureau of the Budget, the Council of Economic Advisers, and my own legal staff to begin the necessary technical review of the measure. I expect them to complete this review over the weekend. While they are working, our merchants will have time to take the necessary inventories to establish floor stock refunds.

The benefits of this measure will begin flowing to consumers, producers, and retailers on Tuesday.

This is the second major tax reduction I will have signed into law in the last year and one-half since I became President. These two measures will reduce the taxes of our citizens by about $18 billion each year.

Despite these reductions, Federal revenues during the period 1961-66 will grow about $18 billion. This compares with the $17.5 billion increase in the preceding 6-year period when there were no tax cuts.

We have also been able to reduce taxes while reducing our deficit almost in half. The deficit in 1964 was $8.2 billion. The budget deficit for the current year was estimated in my January 1965 Budget to be $6.3 billion, and now estimated at $3.8 billion.

These are solid and significant gains. They have come because Government, business, and labor have learned to work together.

This cooperation has been a decisive factor in the record-breaking expansion of the American economy. We are now in the 52d month of that expansion. This is unequaled in peacetime. The reduction in excise taxes will help us to continue to grow.

I believe producers and retailers will match the responsible conduct of the Congress with equal responsibility by passing these reductions along to consumers. This will bring us lower prices, more purchasing power, and new jobs. Two million, two hundred thousand more Americans were working this May than last May. That is a great gain, but we can and must do better. Our tax cuts will help us to do better.

The Treasury has prepared a table showing the distribution of excise tax reduction next year by States.

First, it shows only the amount of tax reduction for calendar 1966--the July and January cuts. The additional reduction will be staged over several years following 1966.

Second, as this tax reduction, which represents increasing purchasing power, is spent and respent throughout the economy, the eventual benefit will be several times the total amount of the tax reduction itself, both for separate States and for the economy as a whole.