Memorandum Outlining Some of the Major Issues of the Campaign.

1. LAST WEEK in my television address to the country I said I would discuss the issues that are important in this campaign. In the Midwest and the South I put particular emphasis on social security, the policies that make for prosperity, TVA, and the fundamental unity of the country.

Tomorrow I intend to talk a lot about my view that government can be both progressive and compassionate on the one hand and prudent on the other.

2. The reasons:

(1) People want a frugal government.

(2) To be responsible in fulfilling unmet public needs, government does not need to be a reckless spender.

(3) It is a myth that the Democratic Party wants to spend for the sake of spending.

3. Some facts:

(1) My first full budget--fiscal 1965--lowers instead of increases expenditures-only the second budget in 10 years to do so.

--Reduces instead of increases the number of government employees--the first budget to do so in 8 years.

(2) Budget expenditures for the first 2 months of this fiscal year are over 1/2 billion dollars below the same period last year.

(3) The number of employees in July 1964 was 25,000 below the same month in the previous year.

(4) I have asked nondefense agencies to wage a war against waste, like Secretary McNamara has done in the Department of Defense. We expect to save hundreds of millions annually.

(5) We now estimate that we will be able to reduce budget expenditures in fiscal 1965 some $676 million below our original January budget estimate. And this follows upon our accomplishment in the fiscal year just ended during which we reduced expenditures $1.1 billion below the original budget submission.

4. I don't believe any administration in modern times has been as successful as we have been in reducing costs.

(1) Secretary McNamara predicted he could save $1.5 billion-he actually saved $2.8 billion. At the same time we were greatly improving our military strength. (Fiscal Year 1964)

(2) Jim Webb tells me he believes NASA will save $128 million in his cost reduction program--almost $50 million more than he expected to be able to save.

(3) John Gronouski is handling more mail with fewer employees--and doing it at less cost. If output per postal worker today were the same as in 1961, the cost of operating the Post Office would be $140 million more than it is.

(4) John Gleason has revitalized the VA insurance program and has increased the productivity of its employees by 24 percent.

5. The crucial fact is this: a "cut cost" policy does not mean a "do-nothing" policy. Government's challenge is to reduce costs, curtail less urgent activities, and find other savings which will permit us to expand essential services or start important new services.

(1) For the last 3 years over 70 percent of the increase in Federal spending went for 3 purposes: (a) a stronger defense, (b) space exploration, (c) uncontrollable interest charges.

(2) Our 1965 austerity program permitted us to take several steps to improve the Nation's well-being, promote better education, and develop our natural resources:

--the war on poverty

--urban mass transportation

--Housing Act of 1964

--major education bills

--Land and Water Conservation Fund Act

--and other programs designed to meet definite needs and improve the lives of our people.

Within an austere total budget, therefore, we have been able by practicing rigorous economy to undertake more forward looking programs for the American people than at any time in recent decades.

6. Summary

This is one of the most important issues of the campaign--whether the Government is going to turn its back on the mounting needs of a growing country under the pretense of a "conservative fiscal philosophy"-or whether the Government is going to serve the interests of our national strength, economic progress, and human compassion.

The first is a radical philosophy. The second is a responsible philosophy.

Efficiency in government should be not the cause of stagnation but the companion of progress.

And that is why I intend to make this a major theme tomorrow.