THE PRESIDENT. This is the first opportunity that I have had to meet with the Cost of Living Council for several weeks and, of course, the first opportunity since we have completed Phase 1 and have embarked on Phase 2.
The Chairman of the Council Secretary Connally, has just returned from Asia. During that period there have been some very significant developments, as we know, developments that have occurred outside of the Council, on the Pay Board and the Price Commission.
I simply want to say that I think I speak for a great majority of Americans in expressing appreciation to the members of the Pay Board and the Price Commission for taking a potentially explosive issue and a very difficult issue and bringing it to a conclusion in a way that is fair, that is equitable, and that we believe will work.
I say we believe that. I base that on checking with various groups that have been involved in the decision making on all sides in our economy. As we look to the future, I think that we can say now that with the decision of the Pay Board with regard to a 5½ percent increase in wages during the next year, with the decision of the Price Commission, which aimed to the goal of between 2 and 3 percent on the price side, that with the massive public support that we had which made Phase 1 such a success in stopping inflation, that that public support continuing in Phase 2 will mean that the year 1972 will see a year in which we cut inflation in half in this country. And by cutting it in half it means that we can build for the future on a sound basis without an overheated economy and build strongly.
So we owe a great deal to the members of the Pay Board and the Price Commission. They were on "Face the Nation" yesterday, but how about facing the Cost of Living Council today. [Laughter] Talk to the Chairman over here. [Laughter]
JUDGE GEORGE H. BOLDT (Chairman, Pay Board). The faces look a little more friendly. [Laughter]
Mr. President, I am very happy to report to you that Phase 2, as far as the Pay Board is concerned, is fully launched, and we are on our way toward the objective that you have set for us of controlling inflation in the United States. And I have not the least doubt in my mind that we are going to accomplish it.
THE PRESIDENT. Dean Grayson.
DEAN C. JACKSON GRAYSON, JR. (Chairman, Price Commission). You said it was going to be a tough and a thankless job, and it was tough. It was very demanding and challenging, but it was not thankless. We found a lot of support from people and the thanks of a lot of people in helping to make this program come forward. Some people said it couldn't be done. I believe it was Secretary Cormally who said it has to be done and it will be done. I think the program that did emerge is a program that is sound and that the overall goal will be achieved.
THE PRESIDENT. I would simply like to say before turning the meeting over to Secretary Connally, that to set wage-price guidelines in a free economy is something that is enormously difficult and that generally has had, shall we say, generally very mild success, if at all.
We believe, however, that we have found the pattern here that may succeed and that will succeed as Judge Boldt puts it. And it will succeed because it has been so carefully worked out, not simply in terms of setting goals that may sound good at the moment but that are totally unachievable, but in setting realizable goals, goals that can be achieved, and then making up our minds that we are going to follow through and see that those goals are achieved. That is what you have done, and that is why we think we owe you a very great debt of gratitude.
Mr. Secretary, would you like to comment?
SECRETARY OF THE TREASURY JOHN B. CONNALLY. Mr. President, I think on behalf of all the members of the Cost of Living Council, we want to express our deep appreciation to Judge Boldt and all the members of his Pay Board and to Dean and the members of his Price Commission. We feel considerably relieved of many responsibilities.
I think it is appropriate at this time to thank all of the staff of the Office of Emergency Preparedness, Dr. Paul McCracken, who served as Chairman of the Policy Subcommittee of the Cost of Living Council, all of the others, Dr. [Arthur F.] Burns, who has been of invaluable assistance to this board, as an adviser to it and now as Chairman of the Committee on Interest and Dividends.
Mr. President, I must say again in behalf of the entire Council that we think the Phase 1, the wage-price freeze, period, which has just expired, was a resounding SUCCESS.
It was fairly easy to administer in terms of what Dean Grayson has and Judge Boldt, because we tried to maintain a freeze, with very few exceptions, very few exemptions. But it was made possible largely by the unstinting support and the wholehearted cooperation of the American people.
I think that, Dean, you and Judge will have that same type of support in the administration of Phase 2, because people obviously feel that something had to be done.
The President was bold and forthright in facing up to it, and the American people applauded his action. And I think it behooves us to try to execute the program which he has laid out. I, frankly, am somewhat amazed at the remarks that are constantly made from all sides about the uncertainty. I think this is to be expected any time a program of this magnitude is undertaken. There has to be some uncertainty about it. But it is not uncertain in terms of its ultimate goals or its ultimate objective.
The goals are very clear that you have already stated. And as you said a moment ago, Dean, nothing is uncertain about whether or not we are going to do it. We have to do it. There is no acceptable alternative. And the President has made this clear to us. He has made it clear to each of you and your respective boards, so I would hope that after the initial few days that you are going to have some difficulty, obviously, getting all of your affairs in order, but with Don Rumsfeld assisting, there is no reason why we can't proceed from one phase into the next with dispatch, with understanding, with support which I think the program merits. Thank you, Mr. President.
THE PRESIDENT. Well, I think the Secretary has very well put the case in its suggested relation of the problem of certainty and uncertainty. Let's all understand we can have certainty very easily, with no freedom. And that was the choice we had to make.
A program of total control, wage and price controls across the board with a huge bureaucracy, would have been one answer. And many well-intentioned people in the Congress and outside have advised that.
We rejected that because we believe that we need to maintain the dynamism of a free economy in this country. We believe we can have freedom and have that freedom without the irresponsibility of inflation. And what we have here is, therefore, enough control to control the inflation, but not so much as to destroy freedom.
Now, within that we do have a degree of uncertainty; that is inevitable in any society that has any element of freedom in it, because when a person is free, we are not quite sure what is going to happen. But it is to the credit of both the Pay Board and the Price Commission and, I must say, too, the Committee on Interest and Dividends, that in this very delicate area of having enough control over our future without destroying the freedom, I think we have ended up on exactly the right course, at least as close to that course as we can end with reasonable men and women working toward that end.
So we thank you all for your participation.