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 5 3/4 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 12-month 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 them—­to approve or modify or reject them.