This year I shall recommend some increases in the size of the active force we are building, with particular emphasis on air power.  This means we shall have to continue large-scale production of planes and other equipment for a longer period of time than we had originally planned.

Planes and tanks and other weapons-what the military call “hard goods”—­are now beginning to come off the production lines in volume.  Deliveries of hard goods now amount to about a billion and a half dollars worth a month.  A year from now, we expect that rate to be doubled.

We shall have to hold to a high rate of military output for about a year after that.  In 1954 we hope to have enough equipment so that we can reduce the production of most military items substantially.  The next 2 years should therefore be the peak period of defense production.

Defense needs will take a lot of steel, aluminum, copper, nickel, and other scarce materials.  This means smaller production of some civilian goods.  The cutbacks will be nothing like those during World War II, when most civilian production was completely stopped.  But there will be considerably less of some goods than we have been used to these past 2 or 3 years.

The very critical part of our defense job this year is to keep down inflation.

We can control inflation if we make up our minds to do it.

On the executive side of the Government, we intend to hold the line on prices just as tightly as the law allows.  We will permit only those wage increases which are clearly justified under sound stabilization policies; and we will see to it that industries absorb cost increases out of earnings wherever feasible, before they are authorized to raise prices.  We will do that, at any rate, except where the recent amendments to the law specifically require us to give further price increases.

Congress has a tremendous responsibility in this matter.  Our stabilization law was shot full of holes at the last session.  This year, it will be one of the main tasks before the Congress to repair the damage and enact a strong anti-inflation law.

As a part of our program to keep our country strong, we are determined to preserve the financial strength of the Government.  This means high taxes over the next few years.  We must see to it that these taxes are shared among the people as fairly as possible.  I expect to discuss these matters in the Economic Report and the Budget Message which will soon be presented to the Congress.

Our tax laws must be fair.  And we must make absolutely certain they are administered fairly, without fear or favor of any kind for anybody.  To this end, steps have already been taken to remedy weaknesses which have been disclosed in the administration of the tax laws.  In addition, I hope the Congress will approve my reorganization plan for the Bureau of Internal Revenue.  We must do everything necessary in order to make just as certain as is humanly possible that every taxpayer receives equal treatment under the law.