Remarks to Members of Federal Agency Task Forces on Cost Reduction.

I HAVE ASKED you to meet with me this morning because I am very deeply concerned about our budgetary outlook for the next year.

In the past 2 years we have made more progress in enacting progressive domestic legislation, I am told, than has been made at any time in this generation. We have gotten through the Congress--or will shortly have done so-the kind of forward-looking legislation which would have been regarded as all but impossible a few years ago.

This includes:

--$19 billions of reductions in income and excise taxes in 19 months--reductions which

have helped to keep going the longest peacetime economic expansion in the Nation's

history.

--Two major civil rights bills--helping to assure the American Negro his full rights as an

American citizen.

--A medical care bill which provides far more in medical care for the elderly than even

its original sponsors ever dared to suggest--involving some $7 billion.

--An antipoverty program which has already brought work and education, and above

all, hope to millions of the desperately poor in our country.

--An education bill which, for the first time, dearly breaks through the barriers of

tradition to assure much more adequate support for elementary and secondary

education.

--A rent supplement proposal which makes it possible to provide decent

housing for low-income families on a large scale and in a dignified way. And that bill

passed the House by half a dozen votes, and I hope it passes the Senate where it's

being debated now.

I believe the reasons for unparalleled success, such as I just enumerated, are very clear:

First, because we, as a Government, have been able to demonstrate that these are sound, practical, and carefully developed programs which serve the best interests of all the people of this Nation.

Second, and equally as important, because we have made the effort--a very real and a very convincing effort--to guarantee the people and the Congress that they are getting full value for every dollar they spend. We have shown that compassionate Government does not mean imprudent Government-that we are just as interested in rooting out old and inefficient programs as we are in developing new programs.

Between fiscal 1964 and 1966 we will increase spending on the major Great Society programs by $4 1/2 billion--and from 1964 to 1966, that is a rise on Great Society programs of over 60 percent. But our total budget will go up only $2 billion. Over half of the new spending is being financed from improved efficiency and by reductions that shrewd, and able, and discerning administrators have made in less essential programs.

Now this is a very sound and very progressive approach. It has paid off, as you can see, in terms of legislative success. And we certainly want to continue it.

But continuing in this direction is going to become increasingly difficult for three primary reasons:

First, we are all facing sharp increases in spending from programs that have been enacted during the last 2 years.

Second, for 2 years in a row now, the January Budget has been able to forecast substantial reductions in Defense spending. This will not be the case for next year--even before we take into account the rising costs of our Viet-Nam operations.

And third, we have sharply increased our sale of financial assets, thus freeing funds for use elsewhere. But we cannot count upon similar asset sale increases in future years.

You have all submitted your programs and your plans and proposals to the Budget Bureau, as a part of the summer budget preview. The Budget Director has estimated the 1967 costs of these programs. So if, between now and January, program requests are reduced by as much as they were in the same period last year, budget expenditures would still grow at a rate very substantially in excess of the rate of growth of our national economy.

Now I want to make it clear, first of all, that I intend to do whatever is necessary to always protect the security of this Nation-and that is number one priority; whatever is necessary to honor all the commitments that we have made abroad; and the commitments we have made to achieve the goals of the Great Society here at home.

But I also want you to know that I don't want a penny more than is necessary spent to do this, and I am absolutely certain that a growth in budget expenditures at the rate indicated is neither necessary nor inevitable.

At the last Cabinet meeting I asked each of the Cabinet members and agency heads to appoint a task force to identify areas where savings could be made that they thought would offset the increased spending for new and expanded programs.

So I have asked to meet with you today, and to talk with the members of these task forces, to impress upon each of you how very important I consider this special assignment that you have been given.

There are a number of principles that I think you ought to follow in your deliberations:

First, hold no program sacred. No program, no matter how long it's been established, should be free of a very cold and a very searching examination. Now let me worry about the political problems; I'll try to make those decisions and suffer the consequences. Some decisions may be unpopular for a time, but sanity and sense will be far more popular in the long run, as we have found with very few exceptions.

Second, the real savings are going to come from reducing or eliminating programs that can be reduced. While I do want you to find more efficient ways of running existing programs, I don't want you to concentrate so heavily on that aspect, that you refrain from asking whether this program is really essential to furthering the national interest.

Third, I want you to put your imagination to work. When it comes to proposing new programs, I find little want of imagination. We have some real dreamers and people that are quite idealistic. So I urge you to be equally ingenious in looking for imaginative ways to make savings, in examining alternatives that cost less.

So I want all of you to remember that the work you do is work that is being watched here in the White House. It's being supported here. It's being appreciated here, and we will be held responsible for it. It is creative work, vital work, and constructive work--and I think you can be proud of your contribution.