So, today, the transition to a peacetime economy is largely behind us.

The economic outlook is good.

The many promising factors I have mentioned do not guarantee sustained economic expansion; however, they do give us a strong position from which to carry forward our economic growth.  If we as a people act wisely, within ten years our annual national output can rise from its present level of about $360 billion to $500 billion, measured in dollars of stable buying power.

My Budget Message on January 17, the Economic Report on the 20th of this month, and several special messages will set forth in detail major programs to foster the growth of our economy and to protect the integrity of the people’s money.  Today I shall discuss these programs only in general terms.

Government efficiency and economy remain essential to steady progress toward a balanced budget.  More than ten billion dollars were cut from the spending program proposed in the budget of January 9, 1953.  Expenditures of that year were six and a half billion below those of the previous year.  In the current fiscal year, government spending will be nearly four and a half billion dollars less than in the fiscal year which ended last June 30.  New spending authority has been held below expenditures, reducing government obligations accumulated over the years.

Last year we had a large tax cut and, for the first time in seventy-five years a basic revision of Federal tax laws.  It is now clear that defense and other essential government costs must remain at a level precluding further tax reductions this year.  Although excise and corporation income taxes must, therefore, be continued at their present rates, further tax cuts will be possible when justified by lower expenditures and by revenue increases arising from the nation’s economic growth.  I am hopeful that such reductions can be made next year.

At the foundation of our economic growth are the raw materials and energy produced from our minerals and fuels, lands and forests, and water resources.  With respect to them, I believe that the nation must adhere to three fundamental policies:  first, to develop, wisely use and conserve basic resources from generation to generation; second, to follow the historic pattern of developing these resources primarily by private citizens under fair provisions of law, including restraints for proper conservation; and third, to treat resource development as a partnership undertaking—­a partnership in which the participation of private citizens and State and local governments is as necessary as Federal participation.

This policy of partnership and cooperation is producing good results, most immediately noticeable in respect to water resources.  First, it has encouraged local public bodies and private citizens to plan their own power sources.  Increasing numbers of applications to the Federal Power Commission to conduct surveys and prepare plans for power development, notably in the Columbia River Basin, are evidence of local response.