Now, this is a tight budget.  It follows the reduction that I made in cooperation with the Congress—­a reduction made after you had reviewed every appropriations bill and reduced the appropriations by some $5 or $6 billion and expenditures by $1.5 billion.  We conferred together and I recommended to the Congress and you subsequently approved taking 2 percent from payrolls and 10 percent from controllable expenditures.  We therefore reduced appropriations almost $10 billion last session and expenditures over $4 billion.  Now, that was in the budget last year.

I ask the Congress to recognize that there are certain selected programs that meet the Nation’s most urgent needs and they have increased.  We have insisted that decreases in very desirable but less urgent programs be made before we would approve any increases.  So I ask the Congress tonight: 

—­to hold its appropriations to the budget requests, and

—­to act responsibly early this year by enacting the tax surcharge which for the average American individual amounts to about a penny out of each dollar’s income.

This tax increase would yield about half of the $23 billion per year that we returned to the people in the tax reduction bills of 1964 and 1965.

This must be a temporary measure, which expires in less than 2 years.  Congress can repeal it sooner if the need has passed.  But Congress can never repeal inflation.

The leaders of American business and the leaders of American labor—­those who really have power over wages and prices—­must act responsibly, and in their Nation’s interest by keeping increases in line with productivity.  If our recognized leaders do not do this, they and those for whom they speak and all of us are going to suffer very serious consequences.

On January 1st, I outlined a program to reduce our balance of payments deficit sharply this year.  We will ask the Congress to help carry out those parts of the program which require legislation.  We must restore equilibrium to our balance of payments.

We must also strengthen the international monetary system.  We have assured the world that America’s full gold stock stands behind our commitment to maintain the price of gold at $35 an ounce.  We must back this commitment by legislating now to free our gold reserves.

Americans, traveling more than any other people in history, took $4 billion out of their country last year in travel costs.  We must try to reduce the travel deficit that we have of more than $2 billion.  We are hoping that we can reduce it by $500 million—­without unduly penalizing the travel of teachers, students, business people who have essential and necessary travel, or people who have relatives abroad whom they want to see.  Even with this reduction of $500 million, the American people will still be traveling more overseas than they did in 1967, 1966, or 1965 or any other year in their history.