ECONOMIC

manent tax rate reductions. My proposals provide income tax relief forindividuals that will total $ 10 billion in 1977.To encourage the investment that will mean good steady jobs for ourexpanding labor force, I am recommending once again a permanentreduction in the corporate income tax from 48 to 46 percent. I urge aswell the enactment of legislation to make permanent the extension of the10 percent investment tax credit and the increased corporate surtaxexemption provided by the Tax Reform Act of 1976. In the longer runwe must eliminate the double taxation of dividend payments. I am thereforerenewing my proposal to integrate corporate and personal incometaxes gradually over a period of years beginning in 1978.I am also renewing my recommendation of accelerated depreciationfor investment in new plants and equipment undertaken in areas whereunemployment is 7 percent or higher. I am firmly convinced that thisis a far better way to raise employment where the economy has not caughtup with the recovery than adding layer upon layer of new spendingprograms.Although such tax cuts for individuals and businesses are desirableat this time to support stronger consumer and capital goods markets,we must be mindful of the need to bring down our large Federal budgetdeficit as quickly as possible. As the economy improves and the demandfor private credit becomes greater, Federal borrowing requirements tofinance the deficit must be lowered to avoid preempting funds needed forprivate investment and to ensure steady progress in the battle againstinflation. Accordingly, in my Budget Message I am again recommendingresponsible restraint in the growth of Federal budget outlays. Thesepolicies will also bring us closer to our goals of stable noninflationaryprosperity.INTERNATIONAL DEVELOPMENTSMuch progress was evident in the rest of the world last year, and internationaleconomic cooperation continued to improve. Restorationof a stable growth path, however, has proved difficult. Throughout theworld, countries are still grappling with the complicated and painfulaftermath of inflation, recession, and the sharp increases in the relativeprice of energy. Serious social and political problems have made theseadjustments more difficult.When I met with the leaders of the major industrial nations in thesummer of 1976, the restoration of full employment in our several economieswas the most important item on our agenda. Stable full employmentand continued improvement in the well-being of our own peoplesand the world population at large, we agreed, will take a number of