29. Editorial Note
On July 18, 1963, President Kennedy sent a special message to Congress on the balance of payments. The President cited the improvement in balance-of-payments deficit and other signs of progress. He believed that further administrative and legislative measures were required, however, to make “inroads into the hard core of our continuing payments deficit,” and he especially reemphasized “the necessity of improving this Nation’s over-all long-range economic performance—including increased investment and modernization for greater productivity and profits, continued cost and price stability and full employment and faster growth.”
President Kennedy then expounded on immediate measures to reduce the deficit and to defend the U.S. gold reserves in the following areas: export expansion, tourism, federal expenditures abroad, and short- and long-term capital flows. Concerning the latter, he urged Congress to enact an “Interest Equalization Tax” that would increase the cost of borrowing to foreigners. Immediate measures in other areas proposed by the President included investment by foreign savers in the securities of U.S. private companies, special government transactions (such as prepayment of debt by foreign countries and advance payments on military purchases), gold sales and increased dollar holdings, a standby arrangement to draw on dollars in the International Monetary Fund, and informal credit arrangements with the central banks of industrialized nations.
Full implementation of his proposed program of action, the President concluded, would realize gains of about $2 billion, which “will give us the time our basic long-term program needs to improve our international competitive position, and increase the attention for investment in the United States.”