Address to the Nation on the Rising Cost of Living.
Good afternoon, my fellow Americans:
Today I would like to share my thoughts with you about a problem that worries millions of Americans--high prices that just keep getting higher.
All across this land, hard working men and women look at paychecks that say they have had a raise. But they wonder why those bigger checks just don't buy any more than their lower paychecks bought
4 years ago.
All across this land, men and women in their retirement, who depend on insurance and on social security and on their life savings, look at their monthly checks and wonder why they just can't seem to make ends meet anymore.
And all across this land, housewives wonder why they have to pay 66 cents a pound, and in some areas much more, for hamburger that cost 53 cents 4 years ago; people who are ill want to know why in those 4 years the cost of 1 day in a hospital has gone from $27 to $48; children who pay a nickel for a candy bar want to know why that bar is only half as big as it used to be.
When it comes to rising prices, it seems to most people that there is no end in sight. Many Americans are upset and many are even angry about this, and they have a right to be, because the ever-rising cost of food and clothing and rent robs them of their savings, cheats them of the vacations and those necessary extras that they thought they had been working for.
Now, why does everything cost so much? And what can we do to hold down the upward climb of prices?
For 5 long years, you have heard politicians and economists denouncing "the high cost of living." Back in 1966 and '67, when prices rose by 3 percent a year, everyone said how bad that was; and then in 1968, when prices speeded up by 4 percent, everyone agreed something ought to be done; and now, when momentum has carried the rise to nearly 6 percent, the same heads are shaking.
You might begin to wonder: If a rising cost of living has so many enemies, why has it been allowed to grow so fast? For years, in political speeches, the high cost of living has been as safe to denounce as the man-eating shark; but after the speeches were over, nobody seemed to do anything about it.
Now, there was a very simple reason why your cost of living got out of hand: The blame for the spiral of wages and prices falls fundamentally on the past policies of your Government.
The Federal Government spent a lot more than it raised in taxes. Some of that spending was on the war in Vietnam, some of the spending was on new social programs, but the total spending was very heavy.
Now we are paying for all that red ink, not only in higher taxes, but in higher prices for everything you buy. To put it bluntly, the frequent failure to balance the Federal budget over the past 5 years has been the primary cause for unbalancing the family budgets of millions of Americans.
Today I want to tell you what we have been doing to make it easier for you to balance your family budget. I want you to know what results we are beginning to see, to understand the meaning of the news about the economy you will be reading in the coming months. And finally, I want to suggest what the American people-what you--can do together to hold down the cost of living.
When this administration took office 9 months ago, we decided that we were going to stop talking about higher prices and we were going to start doing something about them. We knew that some sophisticated investors could make out fairly well in a time of skyrocketing prices, but that the average family bore the brunt of the high cost of living, and the family on a fixed income was being driven right up the wall.
And so, to meet the real needs of most Americans, we began a steady effort to take the upward pressure off your cost of living.
Now, of course, there was a faster way available to bring prices down; many people suggested that we slam on the brakes hard and fast, and bring about a recession. But that kind of shock treatment is harsh and unnecessary; we want to level things off, not shake them up and down. Step by step we took those measures necessary to get our Nation's house in order.
Step one was to cut Federal spending, which more than anything else was pushing your prices up. We cut proposed Federal spending by more than $7 billion. We have taken it out of defense, we are cutting back on construction, we are squeezing it out of many other departmental budgets.
Now, we have been selective in these cuts, recognizing urgent national and social needs, but hardly anything has escaped some reduction. One area that was not cut, and I am sure you will agree with this decision, was the Department of Justice, which has fallen far behind in the war against crime---a war we are determined to win.
Next, working with the Congress, we proposed to phase out the tax surcharge over the course of a year. We could not afford to let the surtax lapse in the middle of 1969, because that would have driven up the prices you pay for everything.
And, also, we have supported our central banking system in its policy of keeping money hard to borrow. When too much money is borrowed, this money is simply used to bid prices up higher.
Now, let's face it: Holding down Government spending and holding up the tax rate and making it harder for people to get credit, is not the kind of policy that makes friends for people in politics. We have asked the American people to take some bitter medicine. We believe that the American people are mature enough to understand the need for it.
Well, here we are, 9 months later, and I can report to you that the medicine has begun to work. There will be no overnight cure, but we are on the road to recovery from the disease of runaway prices.
Now, let me be careful not to mislead anyone: Prices are still going up. They may continue to do so for a while; a 5 year momentum is not easy to stop. But now prices are no longer increasing faster and faster. The increases not only have slackened but the rates of increase are actually down. Without shock treatment, we are curing the causes of the rising cost of living.
For some time to come, you will be reading about how some business is not doing very well. Sales may be sluggish in department stores; new housing, which this Nation needs, has declined; the production of our industry has edged down for the first time in a year.
Now ordinarily, this is bad news. But today, these declines are evidence that our policy of curbing the rising cost of living is beginning to take hold.
We must be realistic. As we gently, but firmly, apply the brakes, we are going to experience some "slowing pains." Just like growing pains, these are a healthy development; but they are painful, nevertheless.
My point very simply is this: We have undertaken a policy that is slowing down the rise in prices. Unfortunately, some industries, some individuals will feel this necessary adjustment more directly than others. But difficult though it may be, and unpopular though it may become when the water gets a bit choppier, by curbing inflation, we do what is best for all the American people.
Just as we must be realistic, we must be compassionate; we must keep a close watch on the rate of unemployment. Now, there are some who say that a high rate of unemployment can't be avoided.
I don't agree. In our leveling-off process, we intend to do everything we can to resist increases in unemployment, to help train and place workers in new jobs, to cushion the effects of readjustment.
For example, we have overhauled and modernized our job training programs. We have proposed reforms extending unemployment insurance to millions not now covered, with higher benefits paid over longer periods to those in the system.
We have proposed a computer job bank to match workers with hundreds of thousands of vacant jobs which exist all over this country.
The Nation must dedicate itself to the ideal of helping every man who is looking for a job to find a job. Today, about 96 percent of the work force is employed. We want it to be more. But we cannot effectively and fairly make it more by ignoring the widespread hardship that a runaway cost of living imposes on so many Americans.
Now that we have begun to detect the signs of success in slowing down, what can you expect your Government to do next?
Well first, let me tell you what we are not going to do. We are not going change our game plan at the end of the first quarter of the game, particularly at a time that we feel that we are ahead. We are not going to turn away from treating basic causes to start treating symptoms alone.
In other words, we are not considering wage or price controls. My own first job in Government was with the old Office of Price Administration at the beginning of World War II. And from personal experience, let me just say this: Wage and price controls are bad for business, bad for the workingman, and bad for the consumer. Rationing, black markets, regimentation-that is the wrong road for America, and I will not take the Nation down that road.
Nor are we considering putting the Government into the business of telling the workingman how much he should charge for his services or how much the businessman should charge for his goods. Those are called "guidelines." They collapsed back in 1966 because they failed to get to the root of the problem.
What we are going to do is based on total realism.
This weekend, I am sending a letter to a cross section of leaders in labor and business across America calling their attention to the latest facts of economic life.
I am asking them to take a hard look at what Government has done in these 9 months--not just our words but our deeds. And I am asking them to make their own future plans on the basis of working and selling in a country that is not fooling about slowing down the rise in the cost of living.
Instead of relying on our jawbone, we have put some backbone in Government's determination to hold the line for the consumer. We are going to continue to exercise that backbone in the face of criticism by a lot of powerful special interests. You can rely on that. And, most important, you can make your plans on the basis that price rises are going to be slowed down.
As workingmen and businessmen get that message--as they see that Government is willing to live up to its responsibilities for doing what is needed to do to hold down prices--we can expect to see a new responsibility in the decisions of labor and management. By responding to the changed conditions, they will be following their self-interest and helping the national interest as well.
Today, I have laid out our strategy to take the pressure off the prices you pay. There is a good reason for spelling out the strategy right now, at the beginning of a turning point in the struggle. Because you see, there is a secret weapon that we intend to use in the battle against rising prices. That secret weapon is the confidence of the American people.
In recent years, that confidence in our ability to slow down the upward spiral has been missing. More and more, a paralyzing fatalism has crept into our view of prices. Too many of us have made the mistake of accepting ever-higher prices as inevitable, and, as a result, we have planned on higher and higher prices. And what we expected--we got.
Only our secret weapon of American confidence in ourselves will get us out of that vicious circle.
More than a generation ago, in the depths of the depression, an American President told you--over this medium of radio--that the only thing we had to fear was fear itself.
Today, in a prosperity endangered by a speedup of prices, the only thing we have to fear is fatalism, that destructive habit of shrugging our shoulders and resigning ourselves to a hopeless future on a wage price treadmill.
I say to my fellow Americans today: The runaway cost of living is not a cross we are obliged to bear. It can be brought under control. It is being slowed by firm and steady action that deals with its root causes.
And as you plan for your own future on the assumption that the rise in prices will indeed slow down, you will be bringing our secret weapon into play. Your confidence in the strength of our economy, your confidence in the determination of America to win this battle, that is what will turn the tide.
On that note of confidence, let me issue this call:
I call upon the Congress to extend the surtax at half rate, 5 percent, from January 1 to June 30 of next year. Also I call upon the Congress, when it passes tax reform legislation, which I have recommended, which is greatly needed, that it do so in a way that we not have a net tax reduction of a size that will help push up prices that the consumer has to pay.
I call upon Americans to urge their Congressmen to pass those measures of manpower training and unemployment insurance that I have proposed, measures that would help make it easier for people to adjust to change.
And I call for your support in our policy of holding down Federal spending so that we are able to continue setting an example with a responsible budget for the next year, fiscal 1971.
I call upon the American people to urge their State and local governments to cooperate in postponing spending that can appropriately be delayed.
I call upon labor's leadership and labor's rank and file to base their wage demands on the new prospect of a return toward price stability.
I call upon businessmen to base their investment and price decisions on that new economic climate, keeping in mind it is in their private interest to be realistic in their planning and to help build a strong economy.
I call upon all Americans to bear the burden of restraint in their personal credit and purchasing decisions, so as to reduce the pressures that help drive prices out of sight.
I am convinced that Americans will answer this call.
I am convinced that a new confidence will be felt in this country when we match the strength of our resources with the strength of our resolution.
The dollar you earn should be worth a dollar. The dollar you save should stay worth a dollar. This is no impossible dream; this is something you are entitled to.
The cost of living affects the quality of life. Together we are going to improve the quality of life, and together, we are going to succeed in slowing down the rise in your cost of living.
Note: The President spoke at 4 p.m. in his office at the White House. His address was broadcast on radio.
On October 16, 1969, the White House Press Office released the text of a news briefing on inflation and the national economy by Dr. Paul W. McCracken, Chairman, Council of Economic Advisers, and Dr. Arthur F. Burns, Counsellor to the President.
An advance text of the President's address was also released by the White House on October 17, 1969.
Richard Nixon, Address to the Nation on the Rising Cost of Living. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/239824