On many occasions I have pointed out that without a tax bill or decreased eXPenditures, next year's deficit would again be around $20 billion. I have emphasized the need to set strict priorities in our spending. I have stressed that failure to act -- and to act promptly and decisively -- would raise very strong doubts throughout the world about America's willingness to keep its financial house in order.
Yet Congress has not acted. And tonight we face the sharpest financial threat in the postwar era -- a threat to the dollar's role as the keystone of international trade and finance in the world.
Last week, at the monetary conference in Stockholm, the major industrial countries decided to take a big step toward creating a new international monetary asset that will strengthen the international monetary system. And I'm very proud of the very able work done by Secretary Fowler and Chairman Martin of the Federal Reserve Board. But to make this system work, the United States just must bring its balance of payments to -- or very close to -- equilibrium. We must have a responsible fiscal policy in this country. The passage of a tax bill now, together with eXPenditure control that the Congress may desire and dictate, is absolutely necessary to protect this nation’s security, and to continue our prosperity, and to meet the needs of our people.
Now, what is at stake is seven years of unparalleled prosperity. In those seven years, thereal income of the average American, after taxes, rose by almost 30 percent -- a gain as large as that of the entire preceding 19 years. So the steps that we must take to convince the world are exactly the steps that we must take to sustain our own economic strength here at home. In the past eight months, prices and interest rates have risen because of our inaction. We must therefore now do everything we can to move from debate to action, from talking to voting and there is, I believe -- I hope there is -- in both Houses of the Congress a growing sense of urgency that this situation just must be acted upon and must be corrected.
My budget in January, we thought, was a tight one. It fully reflected our evaluation of most of the demanding needs of this nation. But in these budgetary matters, the President does not decide alone. The Congress has the power, and the duty, to determine appropriations and taxes. And the Congress is now considering our proposals, and they are considering reductions in the budget that we submitted.
As part of a program of fiscal restraint that includes the tax surcharge, I shall approve appropriate reductions in the January budget when and if Congress so decides that that should be done. One thing is unmistakably clear, however. Our deficit just must be reduced. Failure to act could bring on conditions that would strike hardest at those people that all of us are trying so hard to help
So these times call for prudence in this land of plenty. And I believe that we have the character to provide it, and tonight I plead with the Congress and with the people to act promptly to serve the national interest and thereby serve all of our people.
Now let me give you my estimate of the chances for peace -- the peace that will one day stop the bloodshed in South Vietnam; that will -- all the Vietnamese people [willbe permitted to rebuild and develop their land; that will permit us to turn more fully to our own tasks here at home. I cannot promise that the initiative that I have announced tonight will be completely successful in achieving peace any more than the 30 others that we have undertaken and agreed to in recent years. But it is our fervent hope that North Vietnam, after years of fighting that has left the issue unresolved, will now cease its efforts to achieve a military victory and will join with us in moving toward the peace table.
And there may come a time when South Vietnamese -- on both sides -- are able to work out a way to settle their own differences by free political choice rather than by war. As Hanoi considers its course, it should be in no doubt of our intentions. It must not miscalculate the pressures within our democracy in this electio
