None of these recommended ceiling limitations, over which Congress has final authority, are easy to propose, because in most cases they involve anticipated payments to many, many deserving people.  Nonetheless, it must be done.  I must emphasize that I am not asking to eliminate, to reduce, to freeze these payments.  I am merely recommending that we slow down the rate at which these payments increase and these programs grow.

Only a reduction in the growth of spending can keep Federal borrowing down and reduce the damage to the private sector from high interest rates.  Only a reduction in spending can make it possible for the Federal Reserve System to avoid an inflationary growth in the money supply and thus restore balance to our economy.  A major reduction in the growth of Federal spending can help dispel the uncertainty that so many feel about our economy and put us on the way to curing our economic ills.

If we don’t act to slow down the rate of increase in Federal spending, the United States Treasury will be legally obligated to spend more than $360 billion in fiscal year 1976, even if no new programs are enacted.  These are not matters of conjecture or prediction, but again, a matter of simple arithmetic.  The size of these numbers and their implications for our everyday life and the health of our economic system are shocking.

I submitted to the last Congress a list of budget deferrals and rescissions.  There will be more cuts recommended in the budget that I will submit.  Even so, the level of outlays for fiscal year 1976 is still much, much too high.  Not only is it too high for this year but the decisions we make now will inevitably have a major and growing impact on expenditure levels in future years.  I think this is a very fundamental issue that we, the Congress and I, must jointly solve.

Economic disruptions we and others are experiencing stem in part from the fact that the world price of petroleum has quadrupled in the last year.  But in all honesty, we cannot put all of the blame on the oil-exporting nations.  We, the United States, are not blameless.  Our growing dependence upon foreign sources has been adding to our vulnerability for years and years, and we did nothing to prepare ourselves for such an event as the embargo of 1973.

During the 1960’s, this country had a surplus capacity of crude oil which we were able to make available to our trading partners whenever there was a disruption of supply.  This surplus capacity enabled us to influence both supplies and prices of crude oil throughout the world.  Our excess capacity neutralized any effort at establishing an effective cartel, and thus the rest of the world was assured of adequate supplies of oil at reasonable prices.

By 1970, our surplus capacity had vanished, and as a consequence, the latent power of the oil cartel could emerge in full force.  Europe and Japan, both heavily dependent on imported oil, now struggle to keep their economies in balance.  Even the United States, our country, which is far more self-sufficient than most other industrial countries, has been .put under serious pressure.