We must continue to budget our resources and budget them responsibly in a way that will preserve our prosperity and will strengthen our dollar.

Greater revenues and the reduced Federal spending required by Congress last year have changed the budgetary picture dramatically since last January when we made our estimates.  At that time, you will remember that we estimated we would have a deficit of $8 billion.  Well, I am glad to report to you tonight that the fiscal year ending June 30, 1969, this June, we are going to have not a deficit, but we are going to have a $2.4 billion surplus.

You will receive the budget tomorrow.  The budget for the next fiscal year, that begins July 1—­which you will want to examine very carefully in the days ahead—­will provide a $3.4 billion surplus.

This budget anticipates the extension of the surtax that Congress enacted last year.  I have communicated with the President-elect, Mr. Nixon, in connection with this policy of continuing the surtax for the time being.

I want to tell you that both of us want to see it removed just as soon as circumstances will permit, but the President-elect has told me that he has concluded that until his administration, and this Congress, can examine the appropriation bills, and each item in the budget, and can ascertain that the facts justify permitting the surtax to expire or to be reduced, he, Mr. Nixon, will support my recommendation that the surtax be continued.

Americans, I believe, are united in the hope that the Paris talks will bring an early peace to Vietnam.  And if our hopes for an early settlement of the war are realized, then our military expenditures can be reduced and very substantial savings can be made to be used for other desirable purposes, as the Congress may determine.

In any event, I think it is imperative that we do all that we responsibly can to resist inflation while maintaining our prosperity.  I think all Americans know that our prosperity is broad and it is deep, and it has brought record profits, the highest in our history, and record wages.

Our gross national product has grown more in the last 5 years than any other period in our Nation’s history.  Our wages have been the highest.  Our profits have been the best.  This prosperity has enabled millions to escape the poverty that they would have otherwise had the last few years.

I think also you will be very glad to hear that the Secretary of the Treasury informs me tonight that in 1968 in our balance of payments we have achieved a surplus.  It appears that we have, in fact, done better this year than we have done in any year in this regard since the year 1957.

The quest for a durable peace, I think, has absorbed every administration since the end of World War II.  It has required us to seek a limitation of arms races not only among the superpowers, but among the smaller nations as well.  We have joined in the test ban treaty of 1963, the outer space treaty of 1967, and the treaty against the spread of nuclear weapons in 1968.