Now the time has come to make the most of our gains—­to translate the renewal of our national strength into the achievement of our national purpose.

I.

America has enjoyed 22 months of uninterrupted economic recovery.  But recovery is not enough.  If we are to prevail in the long run, we must expand the long-run strength of our economy.  We must move along the path to a higher rate of growth and full employment.

For this would mean tens of billions of dollars more each year in production, profits, wages, and public revenues.  It would mean an end to the persistent slack which has kept our unemployment at or above 5 percent for 61 out of the past 62 months—­and an end to the growing pressures for such restrictive measures as the 35-hour week, which alone could increase hourly labor costs by as much as 14 percent, start a new wage-price spiral of inflation, and undercut our efforts to compete with other nations.

To achieve these greater gains, one step, above all, is essential—­the enactment this year of a substantial reduction and revision in Federal income taxes.

For it is increasingly clear—­to those in Government, business, and labor who are responsible for our economy’s success—­that our obsolete tax system exerts too heavy a drag on private purchasing power, profits, and employment.  Designed to check inflation in earlier years, it now checks growth instead.  It discourages extra effort and risk.  It distorts the use of resources.  It invites recurrent recessions, depresses our Federal revenues, and causes chronic budget deficits.

Now, when the inflationary pressures of the war and the post-war years no longer threaten, and the dollar commands new respect—­now, when no military crisis strains our resources—­now is the time to act.  We cannot afford to be timid or slow.  For this is the most urgent task confronting the Congress in 1963.

In an early message, I shall propose a permanent reduction in tax rates which will lower liabilities by $13.5 billion.  Of this, $11 billion results from reducing individual tax rates, which now range between 20 and 91 percent, to a more sensible range of 14 to 65 percent, with a split in the present first bracket.  Two and one-half billion dollars results from reducing corporate tax rates, from 52 percent—­which gives the Government today a majority interest in profits—­to the permanent pre-Korean level of 47 percent.  This is in addition to the more than $2 billion cut in corporate tax liabilities resulting from last year’s investment credit and depreciation reform.