ingly being restored. Wholesale prices are lower tonight than they were in August. So are retail food prices. Monetary conditions are also easing. Most interest rates have retreated from their earlier peaks. More money now seems to be available.

Given the cooperation of the Federal Reserve System, which I so earnestly seek, I am confident that this movement can continue. I pledge the American people that I will do everything in a President's power to lower interest rates and to ease money in this country. The Federal Home Loan Bank Board tomorrow morning will announce that it will make immediately available to savings and loan associations an additional $1 billion, and will lower from 6 percent to 54 percent the interest rate charged on those loans.

We shall continue on a sensible course of fiscal and budgetary policy that we believe will keep our economy growing without new inflationary spirals; that will finance responsibly the needs of our men in Vietnam and the progress of our people at home; that will support a significant improvement in our export surplus, and will press forward toward easier credit and toward lower interest rates.

I recommend to the Congress a surcharge of 6 percent on both corporate and individual income taxes-to last for 2 years or for so long as the unusual expenditures associated with our efforts in Vietnam continue. I will promptly recommend an earlier termination date if a reduction in these expenditures permits it. This surcharge will raise. revenues by some $4.5 billion in the first year. For example, a person whose tax payment, the tax he owes, is $1,000, will pay, under this proposal, an extra $60 over the 12month period, or $5 a month. The overwhelming majority of Americans who pay taxes today are below that figure and they

will pay substantially less than $5 a month. Married couples with two children, with incomes up to $5,000 per year, will be exempt from this tax-as will single people with an income of up to $1,900 a year.

Now if Americans today still paid the income and excise tax rates in effect when I came into the Presidency, in the year 1964, their annual taxes would have been over $20 billion more than at present tax rates. So this proposal is that while we have this problem and this emergency in Vietnam, while we are trying to meet the needs of our people at home, your Government asks for slightly more than one-fourth of that tax cut each year in order to try to hold our budget deficit in fiscal 1968 within prudent limits and to give our country and to give our fighting men the help they need in this hour of trial.

For fiscal 1967, we estimate the budget expenditures to be $126.7 billion and revenues of $117 billion. That will leave us a deficit this year of $9.7 billion.

For fiscal 1968, we estimate budget expenditures of $135 billion. And with the tax measures recommended, and a continuing strong economy, we estimate revenues will be $126.9 billion. The deficit then will be $8.1 billion.

I will very soon forward all of my recommendations to the Congress. Yours is the responsibility to discuss and to debate themto approve or modify or reject them.

I welcome your views, as I have welcomed working with you for 30 years as a colleague and as Vice President and President.

I should like to say to the Members of the opposition-whose numbers, if I am not mistaken, seem to have increased somewhat-that the genius of the American political system has always been best expressed through creative debate that offers choices and reasonable alternatives. Throughout our

history, great Republicans and Democrats have seemed to understand this. So let there be light and reason in our relations. That is the way to a responsible session and a responsive government.

Let us be remembered as a President and a Congress who tried to improve the quality of life for every American-not just the rich, not just the poor, but every man, woman, and child in this great Nation of ours.

We all go to school-to good schools or bad schools. We all take air into our lungsclean air or polluted air. We all drink water-pure water or polluted water. We all face sickness someday, and some more often than we wish, and old age as well. We all have a stake in this Great Society-in its economic growth, in reduction of civil strife a great stake in good government.

We just must not arrest the pace of progress we have established in this country in these years. Our children's children will pay the price if we are not wise enough, and courageous enough, and determined enough to stand up and meet the Nation's needs as well as we can in the time allotted us.

III.

Abroad, as at home, there is also risk in change. But abroad, as at home, there is a greater risk in standing still. No part of our foreign policy is so sacred that it ever remains beyond review. We shall be flexible where conditions in the world change-and where man's efforts can change them for the better.

We are in the midst of a great transitiona transition from narrow nationalism to international partnership; from the harsh spirit of the cold war to the hopeful spirit of common humanity on a troubled and a threatened planet.

In Latin America, the American chiefs of

state will be meeting very shortly to give our hemispheric policies new direction.

We have come a long way in this hemisphere since the inter-American effort in economic and social development was launched by the conference at Bogotá in 1960 under the leadership of President Eisenhower. The Alliance for Progress moved dramatically forward under President Kennedy. There is new confidence that the voice of the people is being heard; that the dignity of the individual is stronger than ever in this hemisphere, and we are facing up to and meeting many of the hemispheric problems together. In this hemisphere that reform under democracy can be made to happen-because it has happened. So together, I think, we must now move to strike down the barriers to full cooperation among the American nations, and to free the energies and the resources of two great continents on behalf of all of our citizens.

Africa stands at an earlier stage of development than Latin America. It has yet to develop the transportation, communications, agriculture, and, above all, the trained men and women without which growth is impossible. There, too, the job will best be done if the nations and peoples of Africa cooperate on a regional basis. More and more our programs for Africa are going to be directed toward self-help.

The future of Africa is shadowed by unsolved racial conflicts. Our policy will continue to reflect our basic commitments as a people to support those who are prepared to work towards cooperation and harmony between races, and to help those who demand change but reject the fool's gold of violence.

In the Middle East the spirit of good will toward all, unfortunately, has not yet taken hold. An already tortured peace seems to be

constantly threatened. We shall try to use our influence to increase the possibilities of improved relations among the nations of that region. We are working hard at that task.

In the great subcontinent of South Asia live more than a sixth of the earth's population. Over the years we-and others—have invested very heavily in capital and food for the economic development of India and Pakistan.

We are not prepared to see our assistance wasted, however, in conflict. It must strengthen their capacity to help themselves. It must help these two nations--both our friends-to overcome poverty, to emerge as self-reliant leaders, and find terms for reconciliation and cooperation.

In Western Europe we shall maintain in NATO an integrated common defense. But we also look forward to the time when greater security can be achieved through measures of arms control and disarmament, and through other forms of practical agree

ment.

We are shaping a new future of enlarged partnership in nuclear affairs, in economic and technical cooperation, in trade negotiations, in political consultation, and in working together with the governments and peoples of Eastern Europe and the Soviet Union.

The emerging spirit of confidence is precisely what we hoped to achieve when we went to work a generation ago to put our shoulder to the wheel and try to help rebuild Europe. We faced new challenges and opportunities then and there-and we faced also some dangers. But I believe that the peoples on both sides of the Atlantic, as well as both sides of this Chamber, wanted to face them together.

Our relations with the Soviet Union and Eastern Europe are also in transition. We

have avoided both the acts and the rhetoric of the cold war. When we have differed with the Soviet Union, or other nations, for that matter, I have tried to differ quietly and with courtesy, and without venom.

Our objective is not to continue the cold war, but to end it.

We have reached an agreement at the United Nations on the peaceful uses of outer space.

We have agreed to open direct air flights with the Soviet Union.

We have removed more than 400 nonstrategic items from export control.

We are determined that the Export-Import Bank can allow commercial credits to Poland, Hungary, Bulgaria, and Czechoslovakia, as well as to Romania and Yugoslavia.

We have entered into a cultural agreement with the Soviet Union for another 2 years.

We have agreed with Bulgaria and Hungary to upgrade our legations to embassies.

We have started discussions with international agencies on ways of increasing contacts with Eastern European countries.

This administration has taken these steps. even as duty compelled us to fulfill and execute alliances and treaty obligations throughout the world that were entered into before I became President.

So tonight I now ask and urge this Congress to help our foreign and our commercial trade policies by passing an East-West trade bill and by approving our consular convention with the Soviet Union.

The Soviet Union has in the past year increased its long-range missile capabilities. It has begun to place near Moscow a limited. antimissile defense. My first responsibility to our people is to assure that no nation can ever find it rational to launch a nuclear attack or to use its nuclear power as a credible threat against us or against our allies.

I would emphasize that that is why an important link between Russia and the United States is in our common interest, in arms control and in disarmament. We have the solemn duty to slow down the arms race between us, if that is at all possible, in both conventional and nuclear weapons and defenses. I thought we were making some progress in that direction the first few months I was in office. I realize that any additional race would impose on our peoples, and on all mankind, for that matter, an additional waste of resources with no gain in security to either side.

I expect in the days ahead to closely consult and seek the advice of the Congress about the possibilities of international agreements bearing directly upon this problem.

Next to the pursuit of peace, the really greatest challenge to the human family is the race between food supply and population increase. That race tonight is being lost. The time for rhetoric has clearly passed. The time for concerted action is here and we must get on with the job.

We believe that three principles must prevail if our policy is to succeed:

First, the developing nations must give highest priority to food production, including the use of technology and the capital of private enterprise.

Second, nations with food deficits must put more of their resources into voluntary family planning programs.

And third, the developed nations must all assist other nations to avoid starvation in the short run and to move rapidly towards the ability to feed themselves.

Every member of the world community now bears a direct responsibility to help bring our most basic human account into balance.

IV.

I come now finally to Southeast Asiaand to Vietnam in particular. Soon I will submit to the Congress a detailed report on that situation. Tonight I want to just review the essential points as briefly as I can.

We are in Vietnam because the United States of America and our allies are committed by the SEATO Treaty to "act to meet the common danger" of aggression in Southeast Asia.

We are in Vietnam because an international agreement signed by the United States, North Vietnam, and others in 1962 is being systematically violated by the Communists. That violation threatens the independence of all the small nations in Southeast Asia, and threatens the peace of the entire region and perhaps the world.

We are there because the people of South Vietnam have as much right to remain nonCommunist-if that is what they chooseas North Vietnam has to remain Communist.

We are there because the Congress has pledged by solemn vote to take all necessary measures to prevent further aggression.

No better words could describe our present course than those once spoken by the great Thomas Jefferson:

"It is the melancholy law of human societies to be compelled sometimes to choose a great evil in order to ward off a greater."

We have chosen to fight a limited war in Vietnam in an attempt to prevent a larger war-a war almost certain to follow, I believe, if the Communists succeed in overrunning and taking over South Vietnam by aggression and by force. I believe, and I am supported by some authority, that if they are not checked now the world can expect

II

to pay a greater price to check them later. That is what our statesmen said when they debated this treaty, and that is why it was ratified 82 to 1 by the Senate many years ago. You will remember that we stood in Western Europe 20 years ago. Is there anyone in this Chamber tonight who doubts that the course of freedom was not changed for the better because of the courage of that stand? Sixteen years ago we and others stopped another kind of aggression-this time it was in Korea. Imagine how different Asia might be today if we had failed to act when the Communist army of North Korea marched south. The Asia of tomorrow will be far different because we have said in Vietnam, as we said 16 years ago in Korea: “This far and no further."

I think I reveal no secret when I tell you that we are dealing with a stubborn adversary who is committed to the use of force and terror to settle political questions.

I wish I could report to you that the conflict is almost over. This I cannot do. We face more cost, more loss, and more agony. For the end is not yet. I cannot promise you that it will come this year-or come next year. Our adversary still believes, I think, tonight, that he can go on fighting longer than we can, and longer than we and our allies will be prepared to stand up and resist.

Our men in that area—there are nearly 500,000 now-have borne well "the burden and the heat of the day." Their efforts have deprived the Communist enemy of the victory that he sought and that he expected a year ago. We have steadily frustrated his main forces. General Westmoreland reports that the enemy can no longer succeed on the battlefield.

So I must say to you that our pressure must be sustained-and will be sustaineduntil he realizes that the war he started is costing him more than he can ever gain.

I know of no strategy more likely to attain that end than the strategy of "accumulating slowly, but inexorably, every kind of material resource" of "laboriously teaching troops the very elements of their trade." That, and patience-and I mean a great deal of patience.

Our South Vietnamese allies are also being tested tonight. Because they must provide real security to the people living in the countryside. And this means reducing the terrorism and the armed attacks which kidnaped and killed 26,900 civilians in the last 32 months, to levels where they can be successfully controlled by the regular South Vietnamese security forces. It means bringing to the villagers an effective civilian government that they can respect, and that they can rely upon and that they can participate in, and that they can have a personal stake in. We hope that government is now beginning to emerge.

While I cannot report the desired progress in the pacification effort, the very distinguished and able Ambassador, Henry Cabot Lodge, reports that South Vietnam is turning to this task with a new sense of urgency. We can help, but only they can win this part of the war. Their task is to build and protect a new life in each rural province.

One result of our stand in Vietnam is already clear.

It is this: The peoples of Asia now know that the door to independence is not going to be slammed shut. They know that it is possible for them to choose their own national destinies-without coercion.

The performance of our men in Vietnam-backed by the American people-has created a feeling of confidence and unity among the independent nations of Asia and the Pacific. I saw it in their faces in the 19 days that I spent in their homes and in their countries. Fear of external Communist con