Mr. President, Mr. Speaker, Members of the 86th Congress, my fellow
citizens:

This is the moment when Congress and the Executive annually begin their
cooperative work to build a better America.

One basic purpose unites us: To promote strength and security, side by side
with liberty and opportunity.

As we meet today, in the 170th year of the Republic, our Nation must
continue to provide--as all other free governments have had to do
throughout time--a satisfactory answer to a question as old as history. It
is: Can Government based upon liberty and the God-given rights of man,
permanently endure when ceaselessly challenged by a dictatorship, hostile
to our mode of life, and controlling an economic and military power of
great and growing strength?

For us the answer has always been found, and is still found in the
devotion, the vision, the courage and the fortitude of our people.

Moreover, this challenge we face, not as a single powerful nation, but as
one that has in recent decades reached a position of recognized leadership
in the Free World.

We have arrived at this position of leadership in an era of remarkable
productivity and growth. It is also a time when man's power of mass
destruction has reached fearful proportions.

Possession of such capabilities helps create world suspicion and tension.
We, on our part, know that we seek only a just peace for all, with
aggressive designs against no one. Yet we realize that there is uneasiness
in the world because of a belief on the part of peoples that through
arrogance, miscalculation or fear of attack, catastrophic war could be
launched. Keeping the peace in today's world more than ever calls for the
utmost in the nation's resolution, wisdom, steadiness and unremitting
effort.

We cannot build peace through desire alone. Moreover, we have learned the
bitter lesson that international agreements, historically considered by us
as sacred, are regarded in Communist doctrine and in practice to be mere
scraps of paper. The most recent proof of their disdain of international
obligations, solemnly undertaken, is their announced intention to abandon
their responsibilities respecting Berlin.

As a consequence, we can have no confidence in any treaty to which
Communists are a party except where such a treaty provides within itself
for self-enforcing mechanisms. Indeed, the demonstrated disregard of the
Communists of their own pledges is one of the greatest obstacles to success
in substituting the Rule of Law for rule by force.

Yet step by step we must strengthen the institutions of peace--a peace that
rests upon justice--a peace that depends upon a deep knowledge and dear
understanding by all peoples of the cause and consequences of possible
failure in this great purpose.

To achieve this peace we seek to prevent war at any place and in any
dimension. If, despite our best efforts, a local dispute should flare into
armed hostilities, the next problem would be to keep the conflict from
spreading, and so compromising freedom. In support of these objectives we
maintain forces of great power and flexibility.

Our formidable air striking forces are a powerful deterrent to general war.
Large and growing portions of these units can depart from their bases in a
matter of minutes.

Similar forces are included in our naval fleets.

Ground and other tactical formations can move with swiftness and precision,
when requested by friendly and responsible governments, to help curb
threatened aggression. The stabilizing influence of this capacity has been
dramatically demonstrated more than once over the past year.

Our military and related scientific progress has been highly gratifying.

Great strides have been made in the development of ballistic missiles.
Intermediate range missiles are now being deployed in operational units.
The Arias intercontinental ballistic missile program has been marked by
rapid development as evidenced by recent successful tests. Missile training
units have been established and launching sites are far along in
construction.

New aircraft that fly at twice the speed of sound are entering our
squadrons.

We have successfully placed five satellites in orbit, which have gathered
information of scientific importance never before available. Our latest
satellite illustrates our steady advance in rocketry and foreshadows new
developments in world-wide communications.

Warning systems constantly improve.

Our atomic submarines have shattered endurance records and made historic
voyages under the North Polar Sea.

A major segment of our national scientific and engineering community is
working intensively to achieve new and greater developments. Advance in
military technology requires adequate financing but, of course, even more,
it requires talent and time.

All this is given only as a matter of history; as a record of our progress
in space and ballistic missile fields in no more than four years of
intensive effort. At the same time we clearly recognize that some of the
recent Soviet accomplishments in this particular technology are indeed
brilliant.

Under the law enacted last year the Department of Defense is being
reorganized to give the Secretary of Defense full authority over the
military establishment. Greater efficiency, more cohesive effort and
speedier reaction to emergencies are among the many advantages we are
already noting from these changes.

These few highlights point up our steady military gains. We are rightfully
gratified by the achievements they represent. But we must remember that
these imposing armaments are purchased at great cost.

National Security programs account for nearly sixty percent of the entire
Federal budget for this coming fiscal year.

Modern weapons are exceedingly expensive.

The overall cost of introducing ATLAS into our armed forces will average
$35 million per missile on the firing line.

This year we are investing an aggregate of close to $7 billion in missile
programs alone.

Other billions go for research, development, test and evaluation of new
weapons systems.

Our latest atomic submarines will cost $50 millions each, while some
special types will cost three times as much.

We are now ordering fighter aircraft which are priced at fifty times as
much as the fighters of World War II.

We are buying certain bombers that cost their weight in gold.

These sums are tremendous, even when compared with the marvelous resiliency
and capacity of our economy.

Such expenditures demand both balance and perspective in our planning for
defense. At every turn, we must weigh, judge and select. Needless
duplication of weapons and forces must be avoided.

We must guard against feverish building of vast armaments to meet glibly
predicted moments of so-called "maximum peril." The threat we face is not
sporadic or dated: It is continuous. Hence we must not be swayed in our
calculations either by groundless fear or by complacency. We must avoid
extremes, for vacillation between extremes is inefficient, costly, and
destructive of morale. In these days of unceasing technological advance, we
must plan our defense expenditures systematically and with care, fully
recognizing that obsolescence compels the never-ending replacement of older
weapons with new ones.

The defense budget for the coming year has been planned on the basis of
these principles and considerations. Over these many months I have
personally participated in its development.

The aim is a sensible posture of defense. The secondary aim is increased
efficiency and avoidance of waste. Both are achieved by this budgetary
plan.

Working by these guide lines I believe with all my heart that America can
be as sure of the strength and efficiency of her armed forces as she is of
their loyalty. I am equally sure that the nation will thus avoid useless
expenditures which, in the name of security, might tend to undermine the
economy and, therefore, the nation's safety.

Our own vast strength is only a part of that required for dependable
security. Because of this we have joined with nearly 50 other nations in
collective security arrangements. In these common undertakings each nation
is expected to contribute what it can in sharing the heavy load. Each
supplies part of a strategic deployment to protect the forward boundaries
of freedom.

Constantly we seek new ways to make more effective our contribution to this
system of collective security. Recently I have asked a Committee of eminent
Americans of both parties to re-appraise our military assistance programs
and the relative emphasis which should be placed on military and economic
aid.

I am hopeful that preliminary recommendations of this Committee will be
available in time to assist in shaping the Mutual Security program for the
coming fiscal year.

Any survey of the free world's defense structure cannot fail to impart a
feeling of regret that so much of our effort and resources must be devoted
to armaments. At Geneva and elsewhere we continue to seek technical and
other agreements that may help to open up, with some promise, the issues of
international disarmament. America will never give up the hope that
eventually all nations can, with mutual confidence, drastically reduce
these non-productive expenditures. II.

The material foundation of our national safety is a strong and expanding
economy. This we have--and this we must maintain. Only with such an economy
can we be secure and simultaneously provide for the well-being of our
people.

A year ago the nation was experiencing a decline in employment and output.
Today that recession is fading into history, and this without gigantic,
hastily-improvised public works projects or untimely tax reductions. A
healthy and vigorous recovery has been under way since last May. New homes
are being built at the highest rate in several years. Retail sales are at
peak levels. Personal income is at an all-time high.

The marked forward thrust of our economy reaffirms our confidence in
competitive enterprise. But--clearly--wisdom and prudence in both the
public and private sectors of the economy are always necessary.

Our outlook is this: 1960 commitments for our armed forces, the Atomic
Energy Commission and Military Assistance exceed 47 billion dollars. In the
foreseeable future they are not likely to be significantly lower. With an
annual population increase of three million, other governmental costs are
bound to mount.

After we have provided wisely for our military strength, we must judge how
to allocate our remaining government resources most effectively to promote
our well-being and economic growth.

Federal programs that will benefit all citizens are moving forward.

Next year we will be spending increased amounts on health programs; on
Federal assistance to science and education; on the development of the
nation's water resources; on the renewal of urban areas; and on our vast
system of Federal-aid highways.

Each of these additional outlays is being made necessary by the surging
growth of America.

Let me illustrate. Responsive to this growth, Federal grants and long term
loans to assist 14 major types of capital improvements in our cities will
total over 2 billion dollars in 1960--double the expenditure of two years
ago. The major responsibility for development in these fields rests in the
localities, even though the Federal Government will continue to do its
proper part in meeting the genuine needs of a burgeoning population.

But the progress of our economy can more than match the growth of our
needs. We need only to act wisely and confidently.

Here, I hope you will permit me to digress long enough to express something
that is much on my mind.

The basic question facing us today is more than mere survival--the military
defense of national life and territory. It is the preservation of a way of
life.

We must meet the world challenge and at the same time permit no stagnation
in America.

Unless we progress, we regress.

We can successfully sustain security and remain true to our heritage of
freedom if we clearly visualize the tasks ahead and set out to perform them
with resolution and fervor. We must first define these tasks and then
understand what we must do to perform them.

If progress is to be steady we must have long term guides extending far
ahead, certainly five, possibly even ten years. They must reflect the
knowledge that before the end of five years we will have a population of
over 190 million. They must be goals that stand high, and so inspire every
citizen to climb always toward mounting levels of moral, intellectual and
material strength. Every advance toward them must stir pride in individual
and national achievements.

To define these goals, I intend to mobilize help from every available
source.

We need more than politically ordained national objectives to challenge the
best efforts of free men and women. A group of selfless and devoted
individuals, outside of government, could effectively participate in making
the necessary appraisal of the potentials of our future. The result would
be establishment of national goals that would not only spur us on to our
finest efforts, but would meet the stern test of practicality.

The Committee I plan will comprise educators and representatives of labor,
management, finance, the professions and every other kind of useful
activity.

Such a study would update and supplement, in the light of continuous
changes in our society and its economy, the monumental work of the
Committee on Recent Social Trends which was appointed in 1931 by President
Hoover. Its report has stood the test of time and has had a beneficial
influence on national development. The new Committee would be concerned,
among other things, with the acceleration of our economy's growth and the
living standards of our people, their health and education, their better
assurance of life and liberty and their greater opportunities. It would
also be concerned with methods to meet such goals and what levels of
government--Local, State, or Federal--might or should be particularly
concerned.

As one example, consider our schools, operated under the authority of local
communities and states. In their capacity and in their quality they conform
to no recognizable standards. In some places facilities are ample, in
others meager. Pay of teachers ranges between wide limits, from the
adequate to the shameful. As would be expected, quality of teaching varies
just as widely. But to our teachers we commit the most valuable possession
of the nation and of the family--our children.

We must have teachers of competence. To obtain and hold them we need
standards. We need a National Goal. Once established I am certain that
public opinion would compel steady progress toward its accomplishment.

Such studies would be helpful, I believe, to government at all levels and
to all individuals. The goals so established could help us see our current
needs in perspective. They will spur progress.

We do not forget, of course, that our nation's progress and fiscal
integrity are interdependent and inseparable. We can afford everything we
clearly need, but we cannot afford one cent of waste. We must examine every
item of governmental expense critically. To do otherwise would betray our
nation's future. Thrift is one of the characteristics that has made this
nation great. Why should we ignore it now?

We must avoid any contribution to inflationary processes, which could
disrupt sound growth in our economy.

Prices have displayed a welcome stability in recent months and, if we are
wise and resolute, we will not tolerate inflation in the years to come. But
history makes clear the risks inherent in any failure to deal firmly with
the .basic causes of inflation. Two of the most important of these causes
are the wage-price spiral and continued deficit financing.

Inflation would reduce job opportunities, price us out of world markets,
shrink the value of savings and penalize the thrift so essential to finance
a growing economy.

Inflation is not a Robin Hood, taking from the rich to give to the poor.
Rather, it deals most cruelly with those who can least protect themselves.
It strikes hardest those millions of our citizens whose incomes do not
quickly rise with the cost of living. When prices soar, the pensioner and
the widow see their security undermined, the man of thrift sees his savings
melt away; the white collar worker, the minister, and the teacher see their
standards of living dragged down.

Inflation can be prevented. But this demands statesmanship on the part of
business and labor leaders and of government at all levels.

We must encourage the self-discipline, the restraint necessary to curb the
wage-price spiral and we must meet current costs from current revenue.

To minimize the danger of future soaring prices and to keep our economy
sound and expanding, I shall present to the Congress certain proposals.

First, I shall submit a balanced budget for the next year, a year expected
to be the most prosperous in our history. It is a realistic budget with
wholly attainable objectives.

If we cannot live within our means during such a time of rising prosperity,
the hope for fiscal integrity will fade. If we persist in living beyond our
means, we make it difficult for every family in our land to balance its own
household budget. But to live within our means would be a tangible
demonstration of the self-discipline needed to assure a stable dollar.

The Constitution entrusts the Executive with many functions, but the
Congress--and the Congress alone--has the power of the purse. Ultimately
upon Congress rests responsibility for determining the scope and amount of
Federal spending.

By working together, the Congress and the Executive can keep a balance
between income and outgo. If this is done there is real hope that we can
look forward to a time in the foreseeable future when needed tax reforms
can be accomplished.

In this hope, I am requesting the Secretary of the Treasury to prepare
appropriate proposals for revising, at the proper time, our tax structure,
to remove inequities and to enhance incentives for all Americans to work,
to save, and to invest. Such recommendations will be made as soon as our
fiscal condition permits. These prospects will be brightened if 1960
expenditures do not exceed the levels recommended.

Second, I shall recommend to the Congress that the Chief Executive be given
the responsibility either to approve or to veto specific items in
appropriations and authorization bills. This would save tax dollars.

Third, to reduce Federal operations in an area where private enterprise can
do the job, I shall recommend legislation for greater flexibility in
extending Federal credit, and in improving the procedures under which
private credits are insured or guaranteed. Present practices have
needlessly added large sums to Federal expenditures.

Fourth, action is required to make more effective use of the large Federal
expenditures for agriculture and to achieve greater fiscal control in this
area.

Outlays of the Department of Agriculture for the current fiscal year for
the support of farm prices on a very few farm products will exceed five
billion dollars. That is a sum equal to approximately two-fifths of the net
income of all farm operators in the entire United States.

By the end of this fiscal year it is estimated that there will be in
Government hands surplus farm products worth about nine billion dollars.
And by July 1, 1959, Government expenditures for storage, interest, and
handling of its agricultural inventory will reach a rate of one billion
dollars a year.

This level of expenditure for farm products could be made willingly for a
temporary period if it were leading to a sound solution of the problem. But
unfortunately this is not true. We need new legislation.

In the past I have sent messages to the Congress requesting greater freedom
for our farmers to manage their own farms and greater freedom for markets
to reflect the wishes of producers and consumers. Legislative changes that
followed were appropriate in direction but did not go far enough.

The situation calls for prompt and forthright action. Recommendation for
action will be contained in a message to be transmitted to the Congress
shortly.

These fiscal and related actions will help create an environment of price
stability for economic growth. However, certain additional measures are
needed.

I shall ask Congress to amend the Employment Act of 1946 to make it clear
that Government intends to use all appropriate means to protect the buying
power of the dollar.

I am establishing a continuing Cabinet group on Price Stability for
Economic Growth to study governmental and private policies affecting costs,
prices, and economic growth. It will strive also to build a better public
understanding of the conditions necessary for maintaining growth and price
stability.

Studies are being undertaken to improve our information on prices, wages,
and productivity.

I believe all citizens in all walks of life will support this program of
action to accelerate economic growth and promote price stability. III.

I take up next certain aspects of our international situation and our
programs to strengthen it.

America's security can be assured only within a world community strong,
stable, independent nations, in which the concepts of freedom, justice and
human dignity can flourish.

There can be no such thing as Fortress America. If ever we were reduced to
the isolation implied by that term, we would occupy a prison, not a
fortress. The question whether we can afford to help other nations that
want to defend their freedom but cannot fully do so from their own means,
has only one answer: we can and we must, we have been doing so since 1947.

Our foreign policy has long been dedicated to building a permanent and just
peace.

During the past six years our free world security arrangements have been
bolstered and the bonds of freedom have been more closely knit. Our friends
in Western Europe are experiencing new internal vitality, and are
increasingly more able to resist external threats.

Over the years the world has come to understand clearly that it is our firm
policy not to countenance aggression. In Lebanon, Taiwan, and Berlin--our
stand has been dear, right, and expressive of the determined will of a
united people.

Acting with other free nations we have undertaken the solemn obligation to
defend the people of free Berlin against any effort to destroy their
freedom. In the meantime we shall constantly seek meaningful agreements to
settle this and other problems, knowing full well that not only the
integrity of a single city, but the hope of all free peoples is at stake.

We need, likewise, to continue helping to build the economic base so
essential to the Free World's stability and strength.

The International Monetary Fund and the World Bank have both fully proven
their worth as instruments of international financial cooperation. Their
Executive Directors have recommended an increase in each member country's
subscription. I am requesting the Congress for immediate approval of our
share of these increases.

We are now negotiating with representatives of the twenty Latin American
Republics for the creation of an inter-American financial institution. Its
purpose would be to join all the American Republics in a common institution
which would promote and finance development in Latin America, and make more
effective the use of capital from the World Bank, the Export-Import Bank,
and private sources.

Private enterprise continues to make major contributions to economic
development in all parts of the world. But we have not yet marshalled the
full potential of American business for this task, particularly in
countries which have recently attained their independence. I shall present
to this Congress a program designed to encourage greater participation by
private enterprise in economic development abroad.

Further, all of us know that to advance the cause of freedom we must do
much more than help build sound economies. The spiritual, intellectual, and
physical strength of people throughout the world will in the last analysis
determine their willingness and their ability to resist Communism.

To give a single illustration of our many efforts in these fields: We have
been a participant in the effort that has been made over the past few years
against one of the great scourges of mankind--disease. Through the Mutual
Security program public health officials are being trained by American
universities to serve in less developed countries. We are engaged in
intensive malaria eradication projects in many parts of the world.
America's major successes in our own country prove the feasibility of
success everywhere.

By these and other means we shall continue and expand our campaign against
the afflictions that now bring needless suffering and death to so many of
the world's people. We wish to be part of a great shared effort toward the
triumph of health. IV.

America is best described by one word, freedom.

If we hope to strengthen freedom in the world we must be ever mindful of
how our own conduct reacts elsewhere. No nation has ever been so
floodlighted by world opinion as the United States is today. Everything we
do is carefully scrutinized by other peoples throughout the world. The bad
is seen along with the good.

Because we are human we err. But as free men we are also responsible for
correcting the errors and imperfections of our ways.

Last January I made comprehensive recommendations to the Congress for
legislation in the labor-management field. To my disappointment, Congress
failed to act. The McClellan Committee disclosures of corruption,
racketeering, and abuse of trust and power in labor-management affairs have
aroused America and amazed other peoples. They emphasize the need for
improved local law enforcement and the enactment of effective Federal
legislation to protect the public interest and to insure the rights and
economic freedoms of millions of American workers. Halfhearted measures
will not do. I shall recommend prompt enactment of legislation designed:

To safeguard workers' funds in union treasuries against misuse of any kind
whatsoever.

To protect the rights and freedoms of individual union members, including
the basic right to free and secret elections of officers.

To advance true and responsible collective bargaining.

To protect the public and innocent third parties from unfair and coercive
practices such as boycotting and blackmail picketing.

The workers and the public must have these vital protections.

In other areas of human rights--freedom from discrimination in voting, in
public education, in access to jobs, and in other respects--the world is
likewise watching our conduct.

The image of America abroad is not improved when school children, through
closing of some of our schools and through no fault of their own, are
deprived of their opportunity for an education.

The government of a free people has no purpose more noble than to work for
the maximum realization of equality of opportunity under law. This is not
the sole responsibility of any one branch of our government. The judicial
arm, which has the ultimate authority for interpreting the Constitution,
has held that certain state laws and practices discriminate upon racial
grounds and are unconstitutional. Whenever the supremacy of the
Constitution of the United States is challenged I shall continue to take
every action necessary to uphold it.

One of the fundamental concepts of our constitutional system is that it
guarantees to every individual, regardless of race, religion, or national
origin, the equal protection of the laws. Those of us who are privileged to
hold public office have a solemn obligation to make meaningful this
inspiring objective. We can fulfill that obligation by our leadership in
teaching, persuading, demonstrating, and in enforcing the law.

We are making noticeable progress in the field of civil rights--we are
moving forward toward achievement of equality of opportunity for all people
everywhere in the United States. In the interest of the nation and of each
of its citizens, that progress must continue.

Legislative proposals of the Administration in this field will be submitted
to the Congress early in the session. All of us should help to make clear
that the government is united in the common purpose of giving support to
the law and the decisions of the Courts.

By moving steadily toward the goal of greater freedom under law, for our
own people, we shall be the better prepared to work for the cause of
freedom under law throughout the world.

All peoples are solely tired of the fear, destruction, and the waste of
war. As never before, the world knows the human and material costs of war
and seeks to replace force with a genuine role of law among nations.

It is my purpose to intensify efforts during the coming two years in
seeking ways to supplement the procedures of the United Nations and other
bodies with similar objectives, to the end that the rule of law may replace
the rule of force in the affairs of nations. Measures toward this end will
be proposed later, including a re-examination of our own relation to the
International Court of Justice.

Finally--let us remind ourselves that Marxist scripture is not new; it is
not the gospel of the future. Its basic objective is dictatorship, old as
history. What is new is the shining prospect that man can build a world
where all can live in dignity.

We seek victory--not over any nation or people--but over the ancient
enemies of us all; victory over ignorance, poverty, disease, and human
degradation wherever they may be found.

We march in the noblest of causes--human freedom.

If we make ourselves worthy of America's ideals, if we do not forget that
our nation was founded on the premise that all men are creatures of God's
making, the world will come to know that it is free men who carry forward
the true promise of human progress and dignity.